The UK’s Treasury Committee is launching a new inquiry into student loans and the broader taxation of graduates.
According to the Institute for Fiscal Studies, students now leave university with more than £50,000 in student loan debt. From the April after they graduate, borrowers make loan repayments of 9% of their earnings above £28,470. At her 2025 Budget, the Chancellor announced this threshold would be frozen for three years from April 2027.
The Committee is aware that many graduates have become intensely dissatisfied with the terms of the loan. This was amplified by the recent decision to freeze the threshold for repayments.
MPs are now seeking evidence on graduates’ repayment terms, including the extent to which they are reasonable and proportionate in the broader context of graduates’ marginal tax rates. This will be used to inform the Committee’s views on whether people are being treated fairly once they leave higher education.
The Committee is also enabling anyone over the age of 16 to contribute their experiences directly to the inquiry through an online survey. Questions include whether they would take out the loan today if given the option and whether repayments are having a material impact on their financial planning.
This inquiry will not look at the funding of universities or the administration of individual student loans.
Chair of the Treasury Committee, Dame Meg Hillier (pictured), said: “This inquiry is about fairness. Fundamentally, what we’re asking is, have the goalposts been moved in a way which is unfair to graduates?
“Many people have benefited from widened access to higher education, but upward interest rates and sometimes particularly high marginal tax rates have clearly led to widespread dissatisfaction among graduates who may not have fully understood their repayment terms and the possibility they could change.
“It’s critical that the model for financing university education is sustainable but there are questions over whether decisions such as freezing the threshold for repayments is placing the burden unfairly on younger people.”
