More than 120 MPs and peers have joined forces to demand changes to England’s student loan system, warning it is placing an “unsustainable and unfair financial burden” on graduates.
The cross-party group has urged Chancellor John Healey to overhaul the current Plan 2 repayment system and meet campaigners pushing for reform.
The open letter, organised by campaign group Rethink Repayment, has been signed by 121 parliamentarians from the Labour, Conservative, Liberal Democrat and Green parties.
Among those backing the campaign are former education secretaries Gavin Williamson and Kit Malthouse, as well as Baroness Warwick of Undercliffe, the former chief executive of Universities UK.
MPs from each of the major political parties sponsored the letter, which calls for a meeting with both John Healey and Education Secretary Lucy Powell to discuss reforming the system.
Oliver Gardner, founder of Rethink Repayment, said: “The student loans crisis is no longer a partisan issue. When 121 parliamentarians from across the political spectrum come together on one issue like this, it shows how important it really is.”
Jas Athwal, Labour MP for Ilford South and one of the letter’s sponsors, said: “Student loans were sold as investments in young people’s futures, but for millions of graduates, they have become a tax on aspiration.”
Conservative MP David Reed, who represents Exmouth and Exeter East, echoed those concerns.
Mr Reed said: “At a time when many graduates are already facing a high cost of living, a difficult jobs market and heavy tax burdens, adding what is, for all practical purposes, another 9 per cent charge on their earnings is simply wrong.”
Plan 2 student loans will remain frozen at £29,385 for three years | GETTY
English graduates currently leave university with average student debt of £53,000.
Liberal Democrat MP Munira Wilson also backed the campaign.
Ms Wilson said: “No party has covered itself in glory on the topic of student loans, and the piecemeal changes to the system are seeing young people used as cash cows for other forms of public spending.
“It’s time to work across parliament to build a student finance system that lets people get on with their lives.”
The Plan 2 student loan system applies to those who started university between 2012 and 2023.
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PAInterest is charged at the Retail Prices Index rate of inflation plus up to three percentage points, depending on the borrower’s earnings.
Repayment thresholds, which were originally intended to rise in line with wages, have been frozen several times.
At last year’s Budget, then chancellor Rachel Reeves extended the freeze on the £29,385 repayment threshold for a further three years, marking the third freeze experienced by Plan 2 borrowers.
The Government introduced a six per cent interest rate cap on Plan 2 loans in April following growing criticism of the system.
A parliamentary inquiry later recommended reversing the repayment threshold freeze to honour the original terms offered to students.
The inquiry also concluded that information provided by the Department for Education and the Student Loans Company would have amounted to mis-selling had it been issued by a regulated private lender.
Education secretary Lucy Powell indicated last week that the issue was at the “top of my in-tray”.
Ms Powell had previously described student loan interest rates as “egregious” in comments made in February.
Shadow education secretary Laura Trott is also among those backing the letter, highlighting the cross-party support behind the campaign.
The parliamentarians are seeking a meeting with Mr Healey and Ms Powell to discuss a joint approach to reforming the student loan system.
The campaign follows increasing pressure for reform, with the Sunday Times’ End the Graduate Rip-Off campaign helping to prompt the parliamentary inquiry into the student finance system.