MPs and peers call for student loan reform

More than 120 MPs and peers have asked the chancellor to carry out an "urgent review" of the student loan repayment system.

An open letter coordinated by the campaign group Rethink Repayment says the current set-up places an "unsustainable burden on the next generation of workers".

Among the cross-party signatories are MPs with their own Plan 2 student loans, which have come under particular scrutiny this year.

Last week, Education Secretary Lucy Powell said the interest rate on those loans was "egregious" and the issue was at the top of her in-tray.

Current and former students have different student loan plans depending on where they live in the UK and when they went to university.

The letter to Chancellor John Healey does not specify a particular plan signatories would like to be reformed, nor does it name a particular nation.

However, the debate has centred around Plan 2 loans, which were taken out by students in England between September 2012 and July 2023 and are still issued in Wales. Graduates pay back what they earn above the repayment threshold at a rate of 9%.

The letter says that "successive governments' adjustments to repayment thresholds – together with high interest and marginal tax rates – are placing an unsustainable burden on the next generation of workers".