MPs Backed by Phillipson as She Defends Student Loan Change; Average Repayments to Rise by £8 a Month

Education Secretary Bridget Phillipson has stepped into a growing political storm over reforms to the UK’s student loan repayment system, defending changes that campaigners say will increase the cost of borrowing for graduates. Speaking in broadcast interviews and at Westminster this week, Phillipson said the decision to freeze the repayment threshold under the Plan 2 scheme — which affects those who started university from 2012 to 2023 — will mean that on average graduates will pay about £8 more per month once the new terms take effect.

The controversy centres on the government’s decision to hold the salary threshold at which graduates begin to repay their loans at £29,385 until 2029, rather than allowing it to rise automatically with inflation or wages. The freeze was announced in last year’s Autumn Budget as part of broader fiscal plans designed to manage public finances, but critics say it effectively increases repayments for millions of borrowers because more of their income will be counted as liable for loan deductions over a longer period. Under Plan 2, borrowers pay back 9 per cent of earnings above the threshold, meaning that keeping the threshold flat increases monthly repayment amounts even without a rise in salaries.

Phillipson acknowledged the pressures facing graduates but insisted the policy was a “tough but fair” decision, noting that the threshold will still move in April before the freeze comes into force next year. She said ministers were aware that higher repayments would result from the freeze but argued that “we can’t fix everything at once,” and emphasised that the wider student loan system is complex with “unintended consequences” if altered without careful consideration. She also confirmed that the government would continue to review the system and is willing to explore further reforms against the backdrop of broader economic challenges.

Opposition voices, including graduates who say they face rising costs of living and student debt burdens, have seized on Phillipson’s figures. Some tell media outlets they have already adjusted work patterns — including cutting hours or salary growth — to mitigate the financial impact of higher repayments, highlighting how the policy affects personal finances even before the freeze fully takes hold. Campaign groups are calling for changes such as capping interest rates at a lower measure of inflation and reversing threshold freezes to ease debt pressures for those who took out loans under the existing Plan 2 framework.

The row has also drawn wider political attention. Opposition parties are pressing for a more radical overhaul of student finance, pointing to polling showing increasing public support for interest‑free loans or other reforms to reduce the perceived cost burden on graduates. Meanwhile, Conservative critics have seized on the issue to challenge Labour’s student loan policy choices, arguing they represent an unfair fiscal burden on younger workers.

In Parliament, the debate over student loans forms part of a broader discussion on education funding, cost‑of‑living pressures and public finances. Phillipson’s defence of the current policy settings reflects the government’s priority to balance sustainable public expenditure with targeted support — but with average graduate repayments set to rise by about £8 a month, the controversy over fairness and long‑term repayment burdens is likely to continue as the new repayment year approaches.

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