Xiaohongshu
Hi, I’m Sarah, your Education Officer.
Student loans
At Students’ Union UCL, we believe that everyone, regardless of background, should have the opportunity to attend university. Government has a responsibility to support higher education institutions to deliver high-quality education and to ensure that prospective students can overcome structural barriers to study.
Student loans are a central part of this system. When designed progressively and aligned with the real cost of living in the UK, they can enable students to fund both tuition and maintenance and complete a full degree. However, the current student loan system is increasingly failing to meet this goal.
Why now?
In recent weeks, student loans have been subject to intense media scrutiny. We believe this attention is warranted and that the government must urgently review the system to create a fairer, more progressive model that works for all students.
Most undergraduate students in England who took out loans between September 2012 and July 2023 are on “Plan 2” loans. While all student loan plans operate similarly, Plan 2 has come under notable criticism due to high interest rates and recent changes to repayment thresholds.
All loans issued by the Student Loans Company accrue interest linked to inflation. As a result, many graduates will repay significantly more in real terms than they originally borrowed. Under Plan 2, graduates repay 9% of any income above £28,470, and the government has announced that this threshold will be frozen for three years from April 2027.
A progressive system?
These policies have led to a situation where interest is growing far faster than repayments. As of March 2025, the value of outstanding loans stood at £267 billion and the average debt of students who graduated in 2024 was £53,000. This imbalance is clearly unsustainable and means that most borrowers will never come close to paying off their loan before it is written off.
In practice, the repayment system now functions as a de facto tax. While low earners are protected, the system increasingly places the financial burden on the individual and away from the taxpayer. Those able to pay tuition fees upfront avoid interest entirely, further entrenching inequality.
Higher education delivers clear benefits to individuals and creates a highly skilled workforce that benefits wider society. While we recognise the long-term social and financial advantages that many graduates enjoy, we believe those who earn more over their lifetime should contribute more fairly to the cost of education.
As your Student Officers, we are acutely aware that the repayment system is directly impacting many of our current students and graduates.. Alongside Russell Group Students' Unions, we are calling for a comprehensive review of the student loan system to establish a genuinely progressive model that supports access to higher education and works for everyone.
NUS campaign
We are also backing the NUS campaign on student loans - sign the petition here.
Get in touch
Education Officer: [email protected]