Labour Party minister Lucy Rigby has stood firm in defending recent changes to the UK’s student loan system, despite mounting backlash from graduates and student groups. Speaking to MPs, Rigby emphasized that because student loans are heavily subsidised by the government, this provides the right to modify the terms of existing agreements.
Addressing Parliament on Wednesday, Rigby highlighted that less than half of young people attend university, and stressed the importance of “fairness to taxpayers as a whole” when designing repayment policies. She explained that many students are unable to obtain commercial loans due to a lack of credit history or collateral, or the possibility of loan forgiveness tied to income thresholds.
“Student loans, despite their name, are fundamentally different from commercial loans,” she noted. “Given the government’s significant subsidy, it has the authority to change loan terms as necessary.”
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Her comments come as the Treasury Select Committee launches an inquiry into the English student loan system, gathering evidence from students, graduates, and experts. The National Union of Students (NUS) has called for the inquiry to review key issues such as the repayment threshold and interest rates.
The inquiry focuses in particular on concerns from graduates with Plan 2 loans taken out between 2012 and 2023. Over 50,000 written submissions have been received, with many graduates reporting confusion over the original loan terms at the time of signing. Currently, graduates repay 9% of their income above a threshold, which is frozen at £29,385 from April 2027 for three years—potentially causing repayments to start sooner for many.
A government spokesperson acknowledged the concerns around repayment costs but pointed to steps taken to make the system fairer. These include raising the repayment threshold for the first time since 2021 and capping maximum interest rates to shield graduates from escalating charges. The spokesperson also highlighted the reintroduction of targeted maintenance grants and the protections in place for lower-earning graduates, such as income-linked repayments and cancellation of outstanding debt at the end of the loan term.