The Treasury select committee issued a report on Tuesday criticizing the government’s promotion and administration of plan 2 student loans, contending that promotional campaigns and materials constituted mis-selling to borrowers.
The committee identified three specific areas of concern in how the loans were marketed to students. YouTube videos and promotional slideshows failed to clearly communicate that the government retained the ability to alter loan terms retroactively. Additionally, materials comparing monthly repayment costs to mobile phone contract expenses were deemed inaccurate, particularly for higher earners. The Student Loan Company also did not adequately clarify during the loan application process that the government could modify terms after disbursement.
The report focused attention on the government’s decision earlier in the year to freeze the plan 2 repayment threshold at £29,385 for a three-year period beginning in April 2027. Under this freeze, graduates earning above the threshold must repay 9% of income above that level, with no protection for salary increases against inflation. The committee expressed concern that successive administrations had shifted financial burdens onto younger generations. A survey conducted by the committee received over 52,000 responses, with more than half indicating they did not understand the loan terms before taking them out.
The committee chair stated it was uncommon for the body to recommend reversing a specific budget measure, emphasizing that patience with the current situation had been exhausted. She characterized unfreezing the threshold as a modest change that would not require substantial resources while potentially restoring trust in the student finance system. The government responded by acknowledging the report as an important contribution to the debate and indicated it would seek fair solutions within fiscal constraints. Officials emphasized their commitment to providing students with clear and accurate information going forward.
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