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Mon, 06 Jul 2026

Mon, 06 Jul 2026 Phone contract comparisons 'amounted to mis-selling' student loans, MPs say

A new report says students were not well-enough informed that their loan terms could change retrospectively.

* Students were not told clearly enough that loan terms could change retrospectively, and called for a U-turn on the decision to freeze the income threshold at which some graduates start repaying their loans
* Plan 2 loans, taken out by students in England between September 2012 and July 2023, are still issued in Wales, with graduates automatically paying back what they earn above a certain threshold at a rate of 9%
* Freezing this threshold means graduates start repaying their loans sooner or pay more as their salaries increase with inflation
* The government compared student loan repayments to £30-a-month phone contracts in promotional presentations to teenagers a decade ago, which was "inaccurate for higher earners" and "amounted to mis-selling"
* MPs noted that the government's student loan policies were exempt from consumer protection laws but expected the government "to comply with not only the law, but basic fairness and common decency"
* Critics say the system is unfair, unsustainable, and in urgent need of reform
* A Cambridge graduate who works in HR said her student loan repayments total hundreds of pounds a month, and that she feels like she's not chipping away at her debt due to accruing interest
* Thousands of people responded to an inquiry into student loans, saying they did not fully understand the terms and conditions on their student loans before they took them out
* The Treasury Committee's report said this had shifted the burden of paying for higher education from the highest earners towards all loan holders