Student loans changes may leave some graduates worse off

The Institute for Fiscal Studies says freezing the repayment threshold will raise average lifetime repayments for Plan 2 borrowers by about £3,000, and the government has frozen the threshold for three years starting from the planned April rise.

New analysis from the Institute for Fiscal Studies says recent budget changes will increase lifetime repayments for many graduates with Plan 2 loans. Plan 2 covers students who began undergraduate study in England between 2012/13 and 2022/23. The government announced the repayment threshold will be frozen for three years rather than rising with inflation. Ministers and public figures have given differing responses, with the chancellor defending the system and others calling for further debate. What we know: - The IFS estimates the announced freezes will raise average lifetime repayments for Plan 2 borrowers by about £3,000. - The repayment threshold is currently £28,470 and was due to rise to £29,385 in April 2026; the budget froze it for three years. - Officials and commentators have responded publicly: the chancellor described the system as fair and reasonable, while others, including the health secretary and public figures, said a debate is warranted. Summary: The IFS analysis indicates many Plan 2 graduates will pay more over their lifetimes because the repayment threshold has been frozen. Undetermined at this time.