Students: Loans
The question
To ask the Secretary of State for Education, what assessment her Department has made of the potential impact of freezing student loan repayment thresholds and interest rates from 2027 on the total amount repaid over the lifetime of a loan, broken down by graduate income decile.
Answered by Josh MacAlister
It was announced at the Autumn Budget that the repayment and interest thresholds for Plan 2 student loans will be frozen from the 2026/27 financial year until April 2030, when they will increase annually by inflation.
The department produced the following analysis regarding the impact of freezing the repayment and interest thresholds:
Average lifetime repayments (2024/25 financial year prices) | |||||
Baseline (£) | Post- policy (£) | Impact | |||
£ | % | ||||
Entire cohort | 27,000 | 28,300 | 1,300 | 5 | |
Average | |||||
Lifetime graduate earnings decile | 1 | 2,000 | 2,000 | 0 | 0 |
2 | 4,300 | 4,700 | 400 | 9 | |
3 | 7,700 | 8,100 | 400 | 5 | |
4 | 11,600 | 13,000 | 1,400 | 12 | |
5 | 16,900 | 18,500 | 1,600 | 9 | |
6 | 23,100 | 25,200 | 2,100 | 9 | |
7 | 31,300 | 33,600 | 2,300 | 7 | |
8 | 41,200 | 43,500 | 2,300 | 6 | |
9 | 54,500 | 56,100 | 1,600 | 3 | |
10 | 59,100 | 59,500 | 400 | 1 | |
No freeze has been announced relating to interest rates.
The department will release an equalities impact assessment, including the impact on lifetime repayments, alongside other borrower impacts for the Plan 2 repayment threshold and interest threshold freeze announced at the Autumn Budget. Published results may differ from those provided due to model and data updates.
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