On 11 February 2026, members of the National Union of Students (NUS) came together outside the Houses of Parliament to protest changes to UK student loan repayment policies. The protestors, dressed as sharks, accused Chancellor Reeves of being a “loan shark”. This follows the Chancellor’s announcement in November to freeze the salary at which graduates on plan 2 loans begin to repay their student debts (£29,385), increasing repayments for many UK graduates. The protest reflects long-standing dissatisfaction with the current student finance model, raising questions about fairness, financial sustainability, and the feasibility of alternative funding models.
Plan 2 student loans apply to courses in England and Wales commenced between September 2012 and July 2023. Interest is currently charged at 3.2%-6.2% (RPI at 3.2% plus up to 3% based on income), with graduates repaying 9% of earnings above £29,385 from April 2026. Recent polls show 84% disapproval of this system, whilst the Times has estimated a salary of £66,000 is needed for graduates to outpace the interest accumulated. Chancellor Reeves has defended the system as “fair” and “reasonable”, with loans written off after 30 years and 83% estimated to never be fully repaid, yet critics maintain it exploits 17/18-year-olds naive to future repayment obligations.
Some graduates label the system as a barrier to ambition on two grounds: 1) Prospective students are deterred from pursuing higher education over repayment uncertainties; 2) Graduates are deterred from pursuing higher-paying roles to avoid repayment thresholds. The system has also been argued as ‘regressive’ and inequality-inducing, with wealthier students able to pay off loans earlier or cover costs upfront, thereby avoiding longer-term repayments with interest that middle-income graduates face. However, viable alternatives remain complex. Options such as lowering interest rates, imposing a transparent graduate tax, and debt write-offs all carry fiscal and implementation challenges. Student loans are increasingly politicised, where promises of reform may be utilised to sway voters in upcoming elections.
Legally, this issue engages several areas of public, tax, and financial services law. Retrospective changes to repayment conditions raise concerns over fairness and arguments of ‘mis-selling’. As the loan conditions emerge through public policy rather than typical private lending agreements, any legal challenge is inherently more complex. Recent weeks have seen discussions of class-action lawsuits in the educational sphere. Notably, UCL has just agreed to pay £21 million to students over educational disruptions during COVID, with 36 other UK universities receiving pre-action letters for damages. Such litigation may carry momentum towards the student-loan framework, with increased scrutiny of higher-education funding structures.
Sources- FT, The Independent, The Guardian, Institute for Fiscal Studies, Yahoo Finance
Writer- Steven Collingham
Editor – Imran Chaudhri
Leave a Reply