Thursday, February 26, 2026
Are the government scamming students?
The Guardian reports that angry backbench Labour MPs have attacked ministers over the student loans crisis, saying graduates are being “outrageously scammed”.
The paper adds that during a Commons Westminster Hall debate on Wednesday, several Labour MPs joined calls for an urgent shake-up of the “unfair” system, with one describing it as “an absolute dog’s dinner” and another likening the terms to something that a “loan shark” would offer:
Their intervention comes days after the education secretary, Bridget Phillipson, said there were “problems” with the current arrangements amid growing anger about the plight of millions of graduates saddled with ballooning debts.
At the heart of the row are the estimated 5.8 million people from England and Wales who took out a “plan 2” student loan between 2012 and 2023.
Many graduates are handing over money from their salary every month to repay their loan, but everything that is taken is dwarfed by the interest that is added to their debt, and as a result the sum they owe is getting bigger.
The catalyst for the row was the decision last November by the chancellor, Rachel Reeves, to freeze the salary threshold for plan 2 loan repayments for three years – seemingly in defiance of the original declaration in 2010 that the threshold would “be uprated annually in line with earnings”.
In recent days, the Conservatives and Liberal Democrats have outlined what they would do to fix the system, while the consumer champion Martin Lewis and the National Union of Students are among those spearheading the demands for action.
Lewis this week clashed on air with the Conservative leader, Kemi Badenoch, over the issue on ITV. He later apologised.
Alex Sobel, Labour member for Leeds Central and Headingley, said before the debate on Wednesday: “People on the plan 2 student loan are being outrageously scammed and burdened with unattainable debt levels and interest rates on their student loans.”
Jas Athwal, the MP for Ilford South who called the debate, said many believed plan 2 loans and the wider system were “predatory, regressive, kill graduates’ ambitions”, and the “spiralling” interest was stressful for students.
He added: “A whole generation feel bled dry by a system that just keeps taking from them.”
Instead of preparing students to contribute to society and boost the economy, successive governments have created an avaricious system that is penalising those who want to better themselves with a higher education.
Getting rid of the freeze on salary thresholds is not enough, the whole thing needs to be dismantled and rebuilt with the interests of the learner and the country at its heart.
