Former university pupils are campaigning for student loan repayment reform amid high interest rates above inflation.
Currently in the UK, graduates earning over the current threshold of £28,470 must pay nine per cent of what they earn towards the loan.
For many former students, interest is charged at up to three percentage points above the retail price index.
Last year, Chancellor Rachel Reeves froze thresholds for loan repayments at £29,395 for three years from April 2027.
Conor Boyle who studied at Oxford University from 2021 to 2024, expressed his frustration over the high interest rates for student loan repayments, telling GB News the interest being accumulated on student loans is “criminal”.
“It looks a bit like a cash cow from the Government.”
Michelle Donelen, who was Universities Minister during the pandemic, told this broadcaster: “The student loan repayment system isn’t working.
“I abolished real interest rates for new borrowers under Plan 5 so graduates don’t repay more than they borrowed in real terms.
Michelle Donelen said the student loan repayment system ‘isn’t working’
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“But Plan 2 graduates are still being whacked with interest of over 6 per cent – higher than many mortgages.
“Plus, too many will be paying into retirement because their degree hasn’t led to a graduate job.”
The former MP added: “In other words, they are being ripped off. And we need to face facts, many Level 4+ apprenticeships lead to stronger earnings than some degrees.
“I worked with universities and businesses to expand degree apprenticeships because a traditional degree isn’t the answer to every career – and pushing it as the default is letting young people down. Labour promised graduates would pay less.
“Yet surprise, surprise, fees are up, thresholds are frozen, and graduates are paying more.”
According to the House of Commons Library from 2024 to 2025, over £15billion was added in interest to England’s student loans with only £5billion being paid back.
A spokesman from Rethink Repayment, a campaign group setting out to reform the student loans system, said: “For a lot of graduates, the real issue is that the Government keeps changing the terms of the student loan system retrospectively.
“Young people were told repayments would rise in line with earnings and that loans would be manageable, but those terms have been changed repeatedly.”
They added: “Repayment thresholds have been frozen and interest rates have been pushed above inflation, leaving many graduates battling more debt than they ever imagined – just for pursuing higher education.
“At the same time, rents and living costs have risen massively, and some graduates are seeing hundreds of pounds taken from their pay each month, making it harder to save for the future.”
According to the House of Commons Library from 2024 to 2025, over £15billion was added in interest to England’s student loans with only £5billion being paid back
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The former Political Officer at Oxford Conservatives added: “But if you do the right thing, the thing we should be encouraging; staying in Britain to work, trying to put down for a house, it’s little consolation the debt is written off after 30 years.”
Nick Hillman, Tory adviser and director of the Higher Education Policy Institute, who assisted in setting up the current student loan system, said: “I have a lot of sympathy for those who dislike the large debts they have accrued while at university but, having said that, the campaigners against the current funding system cannot seem to agree on what changes they would like to see or who they think should pay for them.”
Noah Khogali, who studied Government and Politics at Queen’s University Belfast from 2018 to 2021 during the pandemic, told The People’s Channel universities rather than graduates should cover the additional costs, saying: “The Government should explore a new model where terms are fixed at the start, immune to state fiddling with thresholds or interest rates because they’ve run out of money again.
“Crucially, this should be funded by forcing universities to underwrite the debt. If a degree doesn’t lead to a wage high enough to repay the loan, then the university rather than the taxpayer should bear the cost.”
In America, President Biden wiped off student loan repayments for over 5 million Americans with the administration waiving over $183.6billion in student loans.
Gillian Keegan, who was Education Secretary under Rishi Sunak from 2022 to 2024, spoke to GB News about the student loan reforms made in Government.
The former Education Secretary said: “Reforms were underway to enable the student loans system to be used more flexibly throughout life (the Lifelong Learning Entitlement) to enable people to start work (perhaps as an apprentice) and use their student loans later to further their chosen profession at degree and masters degree levels.”
Over 170,000 former students are actively pursuing legal action to obtain compensation due to a breach of contract for missed teaching during the pandemic and strike action.
A Department for Education spokesman said: “These loans were designed and implemented by previous Governments, and we’re making the tough but fair decisions needed to protect taxpayers and students now and for future generations of students and workers.
“The student finance system is heavily subsidised by the Government, and lower-earning graduates will always be protected, with any outstanding loan and interest cancelled after 30 years.
“Under this system, graduates earning some of the highest salaries in the country contribute more towards the repayment of their student loan than workers who did not attend university or graduates on the lowest salaries.”
