The Treasury select committee has declared that student loan promotion in England and Wales amounted to mis-selling, and Labour Party government ministers have a moral obligation to reverse last year's repayment threshold freeze. The committee's report, released on Tuesday, July 7, 2026, calls on the government to honour the terms under which the finance was sold to young people.
Background on Plan 2 Student Loans
Plan 2 student loans were taken out by students who started university between September 2012 and July 2023. Last year, Labour Party Chancellor Rachel Reeves froze the Plan 2 repayment threshold at £29,385 for three years from April 2027. Above this threshold, graduates must repay 9% of anything they earn over that amount.
Treasury Committee's Findings
The Treasury select committee said successive governments had “taken the politically convenient option of loading burdens on to younger generations, hoping that they will not notice until future years”. The committee's chair, Meg Hillier, stated: “Our report is a signal to the Treasury and the Department for Education that this can no longer be ignored. Patience has run out.” She added that reversing the threshold freeze would be “a modest change that would not eat up vast resources”. Hillier emphasised: “Importantly, I believe it would go a long way to repairing the damage done to the trust between graduates and those responsible for overseeing the student loans system.”
Government Response
A government spokesperson responded to the report, calling it an “important contribution to the debate on improving the student finance system, and lays bare the confused, and broken system inherited”. They added: “It is vital students are given clear and accurate information so they can make informed decisions about their future and we are working closely with the Student Loans Company on communications to students.”
