Student loan crisis in England and Wales is a scam on graduates, say angry MPs

"People on the plan 2 student loan are being outrageously scammed and burdened with unattainable debt levels and interest rates on their student loans. To be charged interest from the very first day they began their course, while students are still studying, creates an impossible situation where graduates face mounting debt before their careers even begin."

"Many graduates are handing over money from their salary every month to repay their loan, but everything that is taken is dwarfed by the interest that is added to their debt, and as a result the sum they owe is getting bigger. This creates a cycle where repayments fail to reduce the principal amount owed."

Angry Labour backbench MPs are attacking the government over a student loans crisis affecting approximately 5.8 million English and Welsh graduates from plan 2 loans taken between 2012 and 2023. These graduates face a critical problem: monthly salary deductions for loan repayment are consistently outpaced by accumulating interest, causing total debt to increase rather than decrease. The controversy intensified when Chancellor Rachel Reeves froze the salary repayment threshold for three years, contradicting the original 2010 commitment to annual uprating aligned with earnings growth. Education Secretary Bridget Phillipson acknowledged systemic problems with current arrangements. Labour MPs, alongside opposition parties, consumer advocate Martin Lewis, and the National Union of Students are demanding comprehensive system reform to address what they characterize as unfair treatment of graduates.

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