Student Loan Terms to Be Made Clearer in England – BBC News
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Student loan terms to be made clearer in England
Image source: Getty Images
By Hazel Shearing, Education correspondent
Published 13 September 2026, 00:20 BST
University applicants in England will be given clearer information about student loans before they take them out, the government has said.
Ministers stated they would make it more prominent that governments can change repayment rules and that different career choices can affect how much borrowers repay.
They agreed to some but not all of the recommendations made by MPs after an inquiry into student loans, and did not confirm whether they would reverse a freeze to the repayment threshold for some graduates.
The inquiry concluded that the way loans had been presented to teenagers amounted to mis-selling, following the BBC’s revelation that the Department for Education (DfE) had compared repayments to £30-a-month phone contracts.
The recent debate centred around Plan 2 loans, issued in England between September 2012 and July 2023, and still issued in Wales.
These loans feature an interest rate based on the Retail Prices Index (RPI) plus up to 3% depending on earnings, with borrowers repaying at a rate of 9% of all earnings over a repayment threshold, designed to rise with inflation annually. The loans are written off after 30 years.
Campaigners advocate for a lower interest rate, a lower repayment rate, and for the government to reverse a decision last year to freeze the threshold at £29,385 for three years in England.
Freezing this threshold means graduates start repaying their loans sooner and, once they do, they pay more than they would have done if it had risen with inflation.
MPs on the Treasury Committee called for a U-turn on that decision as part of a series of recommendations following an inquiry this summer.
The Treasury and the DfE did not confirm whether ministers would unfreeze the threshold in their response, but stated: "We keep all aspects of the student finance system under review."
The government rejected recommendations to:
- Split the cost of university evenly between the student and the government
- Stop using RPI to calculate interest rates
- Ensure promotional materials comply with the Financial Conduct Authority’s Consumer Duty, arguing student loans are "very different to commercial loans"
However, they agreed to "making it more prominent that… regulations may be amended by government and Parliament."
They also proposed to "demonstrate how different life and career choices may affect repayment trajectories", including salary progression, retraining, part-time work, and career breaks.
How student loans work for tuition fees and living costs (linked article)
‘Deeply misleading’ school talks compared student loans to £30 phone contracts (linked article)
Phone contract comparisons ‘amounted to mis-selling’ student loans, MPs say (linked article)
Students starting university in England now have Plan 5 loans, which feature a lower interest rate but also a lower threshold and longer repayment term.
Nick Hillman, director of the Higher Education Policy Institute, who helped design the Plan 2 system, stated the government had "absolutely rejected" most of the Treasury Committee’s recommendations and their response would not address the concerns.
