US Markets
Home›US Markets›Sectors›Lawmakers urge urgent review of UK Plan 2 student loan…
Lawmakers urge urgent review of UK Plan 2 student loan repayments
Borrowers on Plan 2 repay 9% of income above the threshold, and campaigners say freezes and rising pay could increase repayments earlier.
More than 120 MPs and peers have called on UK Chancellor John Healey to conduct an urgent review of the student loan repayment system, arguing it creates an unsustainable burden for the next generation of workers, according to an open letter coordinated by the campaign group Rethink Repayment and covered by BBC Business.
The letter targets concerns around Plan 2 loans, used by students who took out loans in England between September 2012 and July 2023 and still issued in Wales. Under the Plan 2 structure, graduates pay back what they earn above a repayment threshold at a rate of 9%, and the signatories say changes to thresholds, combined with interest and high tax rates, reduce the share of pay rises middle-income graduates keep.
Campaigners point to a decision by then-Chancellor Rachel Reeves to freeze the Plan 2 repayment threshold at £29,385 between 2027 and 2030 rather than indexing it to inflation. BBC Business reports the group says the freeze would mean repayments start sooner and rising salaries translate into larger loan payments.
The call also echoes a recommendation from the Treasury select committee following its student loans inquiry, and the committee’s report referenced a BBC investigation that compared Plan 2 student loan repayments to £30-a-month phone contracts.