England to clarify student loan terms for borrowers

The government rejected several recommendations, including splitting university costs equally between students and the government, and ceasing the use of the Retail Prices Index (RPI) for interest rate calculations. However, it agreed to emphasize that student loan regulations are subject to amendment by government and Parliament. Instead of providing long-term repayment predictions, which the government deemed potentially misleading due to accuracy limitations, it proposed illustrating how factors like salary progression, retraining, part-time work, and career breaks might affect repayment trajectories.

Campaigners and some MPs have criticized the government's response, arguing it does not go far enough to address the concerns of existing Plan 2 loan borrowers, who took out loans between September 2012 and July 2023. These loans have an interest rate of RPI plus up to 3%, with repayments set at 9% of earnings above a threshold. The recent freeze of this threshold at £29,385 for three years in England means graduates start repaying sooner and pay more. Liberal Democrat MP Tom Gordon, a Plan 2 borrower himself, plans to introduce a bill in Parliament next week calling for a review of the system. The Student Loans Company stated it is collaborating with the government to offer clear and trusted guidance.