UK minister defends changes to student loans as criticism mounts

A UK Treasury minister has defended the government’s authority to alter student loan terms, telling MPs the heavily subsidised nature of the lending justifies changes that have drawn sharp criticism from campaigners and borrowers. Lucy Rigby, the chief secretary to the Treasury, appeared before the Treasury select committee on Wednesday as part of an inquiry into student loans and graduate taxation. She argued that fewer than half of young people attend university and that the government must weigh “fairness to taxpayers as a whole” [1]. The committee’s inquiry has drawn more than 52,000 responses, with some borrowers describing interest rates as “extortionate” and “higher than my mortgage” [1]. The dispute centres on millions of “plan 2” loans held by students from England and Wales. Many borrowers see their balances grow because monthly repayments are outpaced by interest charges [1]. The repayment threshold was last raised in 2021, and Chancellor Rachel Reeves froze it for a further three years last year [1]. Rigby rejected comparisons to commercial lending. “You couldn’t get a commercial loan because you don’t have the credit history, you don’t have the collateral, you certainly wouldn’t be able to get something which you could write off if you don’t hit certain repayment thresholds,” she said [1]. She added that student loans are “very, very different as a product … to a commercial loan” and that government subsidy gives it the right to vary terms [1]. Consumer campaigner Martin Lewis has previously said that altering loan terms “would not be allowed for any commercial lender – it would go against all forms of consumer law” [1]. Philip Augar, who led the 2019 government review into post-18 education, last week likened the situation to the car finance and payment protection insurance mis-selling scandals [1]. Skills minister Jacqui Smith pushed back, saying: “I think he is wrong … I don’t think this is equivalent to that” [1]. A government spokesperson said ministers had “taken steps to make it fairer – including raising the repayment threshold for the first time since 2021 and capping maximum interest rates this year” [1]. The spokesperson also noted the reintroduction of targeted maintenance grants and stressed that repayments are linked to income, with any outstanding balance and interest written off at the end of the loan term [1]. The political backdrop has intensified scrutiny of the government’s higher-education funding model. Prime Minister Keir Starmer, who led Labour to a landslide victory in the 2024 general election, has presided over a period of deep unpopularity, with his net approval rating falling to an average of –46% by November 2025 [3]. The student loan debate has become entangled with wider questions about intergenerational fairness, after campaigners told MPs that graduates felt they were being used as “cash cows” to fund benefits for older people, such as the state pension triple lock [1].