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The Treasury Committee has described the student loans system as unfair and broken in a report published as part of their student loans inquiry.
We fed into this inquiry alongside other Russell Group Students' Unions in March 2026, and we welcome the Committee’s findings.
As the report states, the loan system is broken and is failing to support graduates once they enter the workforce at the expense of ambition.
Most shockingly, the committee have found that the poor communication of the loan system to prospective students amounts to mis-selling, and must be addressed to ensure young people are provided with transparent guidance on the terms and conditions of the loan.
At Students’ Union UCL, we want a reformed student loan system that balances both taxpayer and student contributions to fund higher education fairly.
We support the Treasury Committee’s call to increase public investment in our universities and to recognise the seismic economic and social contributions that Higher Education makes to the country.
Sarah Jilani, Education Officer at Students’ Union UCL, said:
“We are pleased to see the Treasury Committee laying out the inadequacies of the student loan system. Prospective, current, and future students at UCL deserve a university structure that supports access to a high-quality education and encourages young people to go to university. We will continue to campaign alongside our fellow students’ unions across the Russell Group and beyond to fix the broken student loan system.”
Background to student loans in England
Student loans in England are provided to home students by the Student Loans Company on behalf of the government. Students can receive money to cover the cost of their tuition fees and contributions to their living costs.
There are five different versions of the loan in England, depending on when you started your degree and what level you are studying at. This inquiry is focusing mostly on Plan 2 and Plan 5 loans.
You are on a Plan 2 loan if:
- You are studying an undergraduate degree; AND
- You started your course between 1 September 2012 and 31 July 2023
You are on a Plan 5 loan if:
- You are studying an undergraduate degree; AND
- You started your course on or after 1 August 2023
Student loans inquiry
The report describes the student loans system as “unfair” and “broken”, a characterisation we agree with at Students’ Union UCL. They identify a number of recommendations to improve the system, including:
1. Improving communication to prospective students
Previously, the Department for Education has failed to be transparent with students, especially around the fact that the conditions and terms of a loan can be changed retrospectively. The Committee describe this as “mis-selling” the loan.
2. Change inflation to CPI from RPI
Currently, Plan 2 and Plan 5 loans accrue interest according to the Retail Price Index (RPI) which is considered outdated and is usually higher than the Consumer Price Index (CPI), the more commonly used measure.
3. Restore the cost balance of education between the student and the taxpayer to 50:50
Currently, some students will cover up to 97% of the cost of their own education. Whilst the government argues that – due to write-offs – the total cost for the government is around 30%, we agree with the Committee that there needs to be more public investment in higher education.
4. Reverse the repayment threshold freeze in the 2025 Autumn Budget.
In October, the Chancellor announced the salary thresholds for Plan 2 loans which dictate how much a graduate pays back would not rise in line with inflation and would instead be frozen for three years from April 2027. This means that graduates would pay back more of their salary each year. We urge the government to reconsider and agree with the Committee that they have a “moral obligation” to do so.
We'll keep making the case to government for a better deal for students taking out loans to cover their education. We'll share more news over the coming months.