Thank you to those constituents who have contacted me about the student loan system and to those who have shared Rethink Repayment’s ideas. Ministers will consider them alongside all other submissions as it works to balance the fairness of the student loan system with the overall fairness of the tax system. I take the points raised about the cost-of-living crisis impacting young people very seriously.
Ministers recognise the concerns among borrowers today who are affected by the student loans system. The student finance system we have today was inherited from the previous Government, including Plan 2 student loans, which they introduced. Not only did their higher education funding settlement not work for students, it did not work for the taxpayer or universities. This Government also inherited a challenging financial situation in our country’s public finances, high interest rates and inflation, and public services such as the NHS in serious need of investment.
The Government is making the tough but fair decisions needed to protect taxpayers and students now, and for future generations of students and workers. England’s student finance system is heavily subsidised by government, and lower-earning graduates will always be protected, with any outstanding loan and interest cancelled at the end of the repayment term. Real wages rose more in the first year of the current Government than the first ten years of the previous Government. Interest rates have been reduced six times. Average fixed mortgage payments have fallen from £1,185 per month in 2024 to £1,071 per month by early 2026. RPI Inflation was at one time 14.2% under the previous Government and has fallen to around 3% now, reducing the interest applied to student loans. It is through these improvements, and many others, that the cost-of-living challenge facing graduates is being tackled in the round, step-by-step.
Those who graduate from university earn more on average over their lifetime and we should support the aspiration of every young person from our local schools who wants to go on to higher education. The Government has set an ambitious target of two-thirds of young people studying degrees or gold-standard apprenticeships by the age of 25 and despite the difficult financial position we inherited from the last government, students are being supported with the cost of university by this Government by increasing maintenance loans every year in-line with forecast inflation and reintroducing targeted maintenance grants for the first time since 2016.
These grants will be available from the 2028/29 academic year for new and continuing students on courses aligned with Government priorities and the Industrial Strategy. They will sit alongside maintenance loans, giving extra help to the most disadvantaged students without adding to their debt. There has been a 20% fall in the real value of maintenance loans over the past five years has made it harder for students to manage rising living costs and I am pleased that the government is uprating maintenance loans in line with inflation.
Thank you once again for contacting me.
Best wishes
Rt Hon Hilary Benn
MP for Leeds South
Secretary of State for Northern Ireland