The student loans system is “fair and reasonable” according to Chancellor Rachel Reeves, following criticism over the decision by the government to freeze the repayment threshold for some borrowers. In the November budget, Reeves announced the salary for Plan 2 student loans to be repaid would be frozen at £29,385 for three years from April 2027.
She told BBC Newsnight that the government’s measures were “fair and proportionate” for getting the “balance right between tax and spending.” The changes announced in the budget would bring different repayment plans in line with one another, she said. “So you’ll start paying back at the same income level. I think that is fair and reasonable,” Reeves added.
But founder of Money Saving Expert Martin Lewis has asked the Chancellor to “please have a rethink” of the policy, saying that she was treating student loans as a tax, something he stressed they are not.
“It’s a contract that the government signed with young people who had not been given any education on these loans,” he told Newsnight. “I do not think it is a moral thing for you to do to be freezing the repayment threshold in this way.”
Plan 2 student loans apply to those who began courses in England and Wales between September 2012 and July 2023. The current threshold for this plan is £28,470. Freezing it means that any worker earning above that amount would be forced to make larger repayments on their loans than if it had risen in line with inflation.
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