An inquiry has been launched by MPs into student loans during a period of “widespread dissatisfaction” over terms of repayments. The Treasury Committee says it will examine whether the recent decision to freeze the repayment threshold for many England graduates is fair, the BBC reports.
The inquiry will also tackle whether or not repayment terms are “reasonable,” considering them alongside the “broader taxation of graduates” including income tax. According to the Department for Education (DfE), the freezes aim to “protect taxpayers and students.”
All student loan plans will be examined by the inquiry. The recent controversy has centred on Plan 2 loans, issued in England between September 2012 and July 2023. Theses are still being issued to students in Wales. Graduates with these loans are expected to pay back 9% of everything they earn over the repayment threshold.
In November’s budget, Chancellor Rachel Reeves announced that the threshold will be frozen at £29,385 between 2027 and 2030 and not rise with inflation. This allows graduates to begin to repay sooner, while those earning more than the threshold will have a larger proportion of their salary subject to the repayments than they previously would have.
Campaigners have also called to reverse the freezes. They have also called for a lower repayment rate and lower interest rate, currently the Retail Prices Index (RPI) measure of inflation for graduates as well as up to 3% depending on their earnings.
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