Overview
- Chancellor Rachel Reeves kept Plan 2 terms in place, with the threshold set to rise to £29,385 in April 2027 before a three‑year freeze that pulls more earnings into 9% deductions.
- AJ Bell estimates the freeze could add roughly £250 a year in repayments by 2030, with some graduates paying nearly £10,000 more over a lifetime depending on inflation and earnings.
- Plan 2 charges interest at RPI plus up to 3% and takes 9% of income above the threshold, leaving many balances growing despite payments; average debt is about £53,000 and average monthly repayments via HMRC are £93.
- Nick Hillman, a key 2012 adviser, said it was naive to assume thresholds would always rise and called scrapping maintenance grants regrettable, while warning large‑scale fixes carry high fiscal costs.
- Revelations show government‑funded school talks once likened repayments to a £30 phone contract and advised avoiding the word ‘debt’, as student groups and opposition parties press for changes such as restoring threshold indexation or cutting interest.