"The Treasury and the Department for Education are reviewing different options to offer relief to those with plan 2 student loans, which often leave graduates in England and Wales paying tens of thousands more than the original loan amount. Sources said reversing the freeze had not been ruled out and could be credited to an improving economy."
"The rethink comes after a backlash from graduates over the mis-selling of the loans, which many believed they would not pay back until they were earning significantly higher salaries. Questions have also been raised over the rate of inflation being used to increase the loans, which uses the RPI measure, which the government itself considers to overstate the rate of inflation."
"The repayments mean graduates are paying an effective marginal tax rate of 51% on earnings over 50,270. Badenoch attacked Keir Starmer over the student loans system during prime minister's questions on Wednesday, even though it was introduced by the Conservatives. She said the system was now at breaking point for graduates."
Ministers are examining ways to reduce the burden of plan 2 student loans following weeks of pressure over policies that pull more people into repayments. The Treasury and Department for Education are reviewing relief options for graduates in England and Wales, many of whom pay tens of thousands more than their original loan amounts. The frozen repayment threshold at £29,385 until 2030 is expected to increase graduate repayments by up to £300 annually. Conservative leader Kemi Badenoch proposes changing the inflation rate applied to repayments, while Labour MPs advocate reconsidering the threshold freeze. Reversing the freeze could be credited to economic improvement. Graduates face an effective marginal tax rate of 51% on earnings over £50,270, and many report feeling misled about repayment expectations.
Read at www.theguardian.com
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