130 MPs and peers urge Chancellor to fix student loans in tomorrow's Budget

A cross-party group of 130 MPs and peers has written to the Chancellor, John Healey, urging him to use tomorrow's Budget to start fixing the student finance system.

The letter, led by Tom Gordon, Liberal Democrat MP for Harrogate and Knaresborough, was sent yesterday. It builds on a letter sent in August by Labour MP Sadik Al-Hassan. Signatories come from parties across both Houses and includes Labour, Conservative, Lib Dem, Green, Plaid Cymru, and other parliamentarians.

The letter calls on the Chancellor to:

• Stop the Plan 2 repayment threshold freeze before it takes effect in April 2027;
• Scrap RPI for a fairer interest rate, such as CPI, through a cross-party commission on student loan reform;
• Guarantee that loan terms will never again be changed retrospectively.

Recent parliamentary questions tabled by Tom Gordon revealed that 2.09 million borrowers saw their debt rise despite making regular repayments, 1.6 million of them on Plan 2 loans.

The Treasury Committee's report, Student loans: Broken and unfair?, said the Government "must reverse the repayment threshold freeze in the Autumn Budget", describing it as a moral obligation.

Tom Gordon MP said:
 

"Graduates were sold these loans on one set of terms and are now repaying them on another. No other lender could get away with that.

"Two million people are paying in every month and watching their debt go up. They're nurses, teachers and engineers, and they're losing faith that the system will ever be fair to them.

"As a Plan 2 graduate myself, I know how strong this sense of injustice feels. No party that has governed in recent decades comes to this with clean hands. That's why 130 of us from across Parliament have come together to ask the Chancellor to act.

"Tomorrow's Budget is the moment to honour the deal a generation was promised."