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Key update on Plan 2 student loans as minister 'sees issue'

Education Secretary Bridget Phillipson has said she will "look at" Plan B student loans amid widespread concerns

[LONDON, UNITED KINGDOM - JANUARY 27: UK Secretary of State for Education, Bridget Phillipson leaves Downing Street after the weekly Cabinet meeting in London, United Kingdom, on January 27, 2026. (Photo by Zeynep Demir/Anadolu via Getty Images)]

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Secretary of State for Education Bridget Phillipson(Image: Anadolu, Anadolu via Getty Images)

The Education Secretary has said she will "look at" Plan 2 student loans following widespread alarm over spiralling costs. However, she stopped short of pledging any concrete reforms to the system.

Bridget Phillipson maintained she sought "fairer" arrangements for graduates but cautioned that the Government faced "a question of priorities" when pressed on whether the financial burden would be lightened. In the wake of Chancellor Rachel Reeves' November budget, the salary threshold triggering repayments under Plan B will remain frozen at 29,385 for three years, meaning countless graduates will face heftier bills. Interest on these loans stands at the Retail Prices Index (RPI) inflation rate plus as much as 3%, varying according to a graduate's earnings.

The Conservatives have vowed to cap this at RPI alone while slashing university places and boosting apprenticeship numbers, in proposals set to pile additional pressure on the Treasury.

Speaking to broadcasters on Sunday, Ms Phillipson remarked it was "galling that the very people who designed, implemented and delivered that system are now complaining about the fundamental problems that they see within it".

She also lambasted proposals to shrink university admissions, arguing these came from individuals who "had the benefits of a university education" themselves and now sought to withhold it from others. "I'm not in the business of pulling up the drawbridge behind me and saying to other young people who are ambitious, who want a chance to go to university, that they're going on to study on poor-quality courses," Ms Phillipson said.

[student celebrate graduation by throwing their caps]

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There are calls for change(Image: Pexels)

When questioned whether the Government would reform the Plan B system - which critics have likened to a "loan shark" operation run by the Treasury - she told the BBC's Sunday With Laura Kuenssberg: "I will look at it, of course I will."

'I see the issue'

Ms Phillipson maintained that graduates in their 30s were receiving support through alternative means, pointing to expanded free childcare provision, frozen rail fares and "investment in housing".

Pressed on whether the Government would specifically ease the repayments, she told Sky News' Sunday Morning Trevor Phillips: "I get the problem. I see the issue.

"In reality as a Government, you have to look at a question of priorities, and what you can do and how fast you can do it, and given the shape of what we have in the public finances this is really hard."

[ROTHERHAM, ENGLAND - JANUARY 29: Chancellor of the Exchequer, Rachel Reeves, views advanced robotics manufacturing during a visit to the University of Sheffield Advanced Manufacturing Research Centre (AMRC) on January 29, 2026 in Rotherham, England. Chancellor Rachel Reeves is discussing the government's growth plans for the North during her visit to AMRC, the University of Sheffield's manufacturing and research hub. (Photo by Christopher Furlong/Getty Images)]

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Chancellor Rachel Reeves(Image: Christopher Furlong, Getty Images)

Shadow education secretary Laura Trott argued the Tories wanted to axe funding for "dead-end university courses", which she claimed were leaving graduates facing bleaker employment prospects.

Under Conservative proposals, young people entering their first full-time employment would also have the initial 5,000 of national insurance contributions they pay deposited into a personal savings account, which could be put towards purchasing a home, the party claims.

Tory leader Kemi Badenoch said: Plan 2 student loans are an unfair debt trap: millions of graduates are doing the right thing, paying every month, yet watching the balance they owe growing bigger because interest piles on faster than repayments. If Labour had any sense, Rachel Reeves would act now and use her spring statement to adopt this plan.

The Liberal Democrats, who along with the Tories lifted the cap on tuition fees and introduced the Plan 2 system during the Conservative-led coalition government in the 2010s, have also pledged to cut costs. The party has called for the threshold freeze to be scrapped and for the creation of a royal commission to consider longer-term changes, including replacing RPI with a fairer rate.

Lib Dem universities spokesman Ian Sollom said: My party paid a heavy price for making promises on tuition fees that we couldnt keep. Weve learned from that, which is why today were setting out a proposal that is pragmatic, deliverable, and would make a real difference. But the system also needs fundamental reform that lasts beyond any single parliament.

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