The freezing of repayment thresholds on plan 2 student loans from 2027 to 2030 is a breach of natural justice, says money expert Martin Lewis (pictured).
He recently told Victoria Derbyshire on BBC’s Newsnight that the freeze is a breach of contract and a breach of promise.
Lewis said all plan 2 graduates, there are 5.8m of them, need to write to their MPs and say ‘this isn’t on’.
Plan 2 loans (issued from 2012 to 2023, and still running in Wales), are the above inflation loans linked to inflation. So, when you have high inflation, interest rates go up! The salary threshold, above which plan 2 graduates must repay 9% of anything they earn rises to £29,385 in April.
He stressed the freeze is not what they were promised. He explained students have a contract with the government and it is unilaterally changing the terms.
Lewis said if he could talk directly to Rachel Reeves, he would say: “Chancellor, you know you are doing this as fiscal drag as if student loans were a tax, it is now a tax. It is a contract that the government signed with young people who had not been given any education on these loans. I do not think this is a moral thing for you to do by freezing the repayment threshold in this way, It is not like tax that we know is variable. You didn’t say the terms were viable. This isn’t right. Please have a rethink.”
Commenting on the story one graduate said: “Before I took out the student loan, I was told the annual interest would always be extremely low. I was lied to.”
Another said: “This is just as much a scandal as mis-sold PPI and car finance. Sold out a generation.”
To watch the interview in full go to: https://www.youtube.com/watch?v=IzAN7ZBDT8Q
