A generation is crying out for change to the student loans system, it is time we listened

Education is hailed as the cornerstone of meritocracy. For generations, aspiring lawyers, doctors and engineers are promised that no matter their background, higher education can pave the way for a bright future – one where ambition and hard work serve as proxies for success.

Yet that promise is no longer holding.

In Ilford South and beyond, graduates are not stepping into prosperity; they are stepping into decades of debt. In my recent Westminster Hall debate on this topic, I and colleagues from across the House called on the Government to take bold action. We cannot allow the failures of our predecessors to define the limits of our ambition. Freezing repayment thresholds to balance the books is not prudence – it is short-termism, and fiscal responsibility should not mean punishing the future of our skilled workforce.

The consequences are no longer abstract. One constituent told me he left university with £64,000 of debt. Four years into repayment, he now owes more than £99,000. As the cost-of-living crisis escalates, entry to the property market becomes a pipedream, and career progression stagnates. The consensus of millions of graduates like him, is that the promise of opportunity has been replaced by the reality of compounding debt.

When the Conservative Party trebled tuition fees to £9,000 and introduced Plan 2 loans in 2012, they cheapened the value of academia. Eighteen-year-olds, many with no real financial literacy, are sold a dream of a barely noticeable “graduate tax”, deducted from their earnings based on their success. They were reassured that repayments would be manageable and proportionate to success, but the fine print tells a different story.

Understanding risk is fundamental to informed decision making. Yet the terms of Plan 2 loans are at the mercy of political whims. Repayment thresholds are unilaterally changed without consultation. Interest rates are pegged at an unreliable RPI measure of inflation. Yes, freezing thresholds may improve Treasury forecasts, but is that really the test of fairness? Fairness is not measured only by spreadsheets. Outstanding student loan balances are projected to reach £500 billion in today’s prices by the mid-2040s. That figure may sit comfortably in fiscal modelling, but it represents millions of individuals navigating life with a financial weight that never seems to lighten.

The burden is not carried equally. Students from wealthy families who can pay their fees upfront avoid decades of interest but also the psychological consequences of being saddled with a debt that just keeps growing. In fact, the interest begins to accumulate before students even step into their first lecture hall. Further studies are now regarded less like a pursuit of academic interest, and more like the pursuit of debt interest. A whole generation feels bled dry by a system that keeps taking from them.

Universities should be vessels of opportunity and social mobility. Our country is beset by problems while we have a generation of aspirational and educated young people ready to be unleashed. There are 5.6 million people in this country with Plan 2 loans. They are our teachers, engineers, healthcare workers and entrepreneurs. Rather than treating them as liabilities on a balance sheet, we should see them as assets to be empowered.

If we are serious about long-term prosperity, we must move beyond short-term accounting fixes. The Government should consider raising the threshold to reflect economic reality, reconsider the use of RPI for interest calculations, and reduce the flat 9% repayment rate that weighs heaviest on middle earners. If student finance is to promote opportunity rather than quietly erode it, these reforms must be revisited with fairness in mind.

We are indebted to graduates for the contributions they make to our economy and public services – but graduates themselves are just in debt.

If education is truly the cornerstone of meritocracy, it cannot also be the foundation of lifelong financial insecurity. A generation is crying out for change to the student loans system, it is time we listened.