Student loan promotion in England and Wales amounted to mis-selling, MPs say
Summary
MPs say the government misled students in England and Wales about the terms of student loans. They criticized materials that compared loan repayments to phone contracts and did not clearly explain that terms could change later. The Treasury committee called for the government to reverse a planned freeze on the repayment threshold.Key Facts
- The repayment threshold for plan 2 student loans will be frozen at £29,385 from April 2027 for three years.
- Graduates pay back 9% of their earnings above this threshold.
- The freeze means rising salaries do not reduce the loan repayment burden against living costs.
- MPs said promotional materials did not reveal that the government could change loan terms retrospectively.
- A committee survey with over 52,000 respondents found many did not understand loan terms before borrowing.
- The government capped interest rates on student loans at 6% but has not reversed the repayment threshold freeze.
- MPs urged the government to honor the original terms promised when the loans were introduced.
- A government spokesperson said they are working to improve the student finance system and communications with students.
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