Rachel Reeves defends student loans freeze as 'fair and reasonable'

Chancellor Rachel Reeves said freezing the Plan 2 repayment threshold is 'fair and reasonable' and aims to align repayment plans; personal finance expert Martin Lewis criticised the move as treating loans like a tax.

Chancellor Rachel Reeves defended a planned freeze to the Plan 2 student loan repayment threshold. The freeze was announced in the November Budget and sets the threshold at £29,385 for three years starting in April 2027. Critics, including Martin Lewis, said freezing the threshold treats student loans like a tax. The debate focuses on differences between repayment plans and the effect of higher interest on some borrowers. Key points: - Reeves described the change as "fair and proportionate" and said it brings different repayment plans into line. - The Budget freezes the Plan 2 repayment threshold at £29,385 for three years from April 2027; the current Plan 2 threshold is £28,470. - Plan 2 covers students who started courses in England and Wales between September 2012 and July 2023; repayments are 9% of earnings above the threshold. - Martin Lewis said the freeze treats the loans like tax and noted higher interest during recent inflation has increased balances for some borrowers. Summary: The freeze means some graduates will begin or increase repayments from April 2027 and higher interest during recent inflation has made it harder for affected borrowers to reduce outstanding balances. Undetermined at this time.