Graduates criticise Budget for failing to address Plan 2 student loan repayments

Graduates have criticised the Budget for not addressing Plan 2 student loan repayments, BBC News reported. Help for graduates with student loans was not mentioned in the chancellor's measures, although the issue came up repeatedly in a BBC special programme on how the Budget affects the under-35s.

Colette Smith, the BBC's Your Voice correspondent, spoke to graduates in Leicester. Two of them said they were cross about what they did not hear. One said there was nothing about student loans, Plan 2 or postgraduate loans. They wanted the repayment threshold changed, arguing the current level is too low and the repayments are daunting.

BBC News explained that Plan 2 loans were taken out by millions of people in England between 2012 and 2023. In Wales, they are still used to cover tuition fees and living costs. Interest starts when a course begins and is based on inflation plus up to three percentage points, capped at 6% of the total debt each year. The repayment threshold is £29,385 a year and is frozen for the next three years. Graduates pay 9% of earnings above that threshold. On a salary of £30,000, the gap above the threshold is £615, so the annual repayment is about £55.

Because the threshold is frozen while average wages rise, more people will start to repay and more of their wages will be included, BBC News reported. The government says the system is under review but has not been able to take action yet.

Another graduate who contacted BBC Your Voice said their student loan stood at £83,000 and that the sum could be a deposit on a house. They said the promises felt false and that the silence was deafening. BBC News reported that for some graduates on Plan 2, the debt is still rising as interest accrues.