Martin Lewis responds to 'disappointing' student loans update after repayment controversy

Martin Lewis responds to 'disappointing' student loans update after repayment controversy Martin Lewis wants the government to axe the upcoming repayment threshold freeze on Plan 2 student loans Martin Lewis has called a government response on student loans “very disappointing” and says it “does little” to help millions of graduates who are struggling with debt. The government has pledged to make it clearer that the terms and conditions of a student loan can be changed after the Commons Treasury Committee warned the way the loans have been presented has amounted to "mis-selling". Money Saving Expert founder Martin welcomed the “small crumbs” of progress - but said it does not address the upcoming freeze of the Plan 2 repayment threshold. In her Budget last year, then-Chancellor Rachel Reeves announced that the repayment threshold on Plan 2 loans in England would be frozen at the current threshold, £29,385 for three years from April 2027. Graduates repay 9% of their income when they earn over this amount, although interest on the loan starts to accrue from the day the first payment is made to the university. But in a report published in July, the Treasury Committee said the government had a “moral obligation” to reverse the freeze. The threshold would have otherwise risen with inflation. You will be on a Plan 2 student loan if your undergraduate course started between September 1, 2012 and July 31, 2023 in England, or after September 1, 2012 in Wales. Martin said: "This is a very disappointing response that does little to help the millions of students already struggling with student loans, after years of degradation of the terms they signed up to, by successive governments. "Most urgently, it doesn't address the coming immoral freeze of the Plan 2 repayment threshold, by Rachel Reeves, due to start next April. "That will mean all those on Plan 2 loans will have to effectively pay more each year. I say it's immoral because it is a negative retrospective change of terms to loan contracts students, often aged 18, signed up to. No commercial firm would ever be allowed to do that. "The only slim hope is that as the freeze was announced in a Budget, it has to be undone in a Budget and therefore they are just waiting for the coming one to do that." The government said it “recognises” the cost-of-living challenges that many graduates face and “understands concerns” about the impact of repayment terms. The interest on Plan 2 loans has been capped at a maximum of 6% following widespread anger over graduates being stuck with ballooning debts. It continued: “We keep all aspects of the student finance system under review. Decisions on student loan repayment arrangements must be considered alongside wider fiscal priorities, the long-term sustainability of the higher education funding system, and the need to ensure value for money for taxpayers. “Any significant changes require careful consideration of their impacts on borrowers, taxpayers and public finances. “The government will continue to consider opportunities to ensure the fairness of the student finance system for borrowers, taxpayers and public finances.”