Comparing student loan repayments to a £30-a-month phone contract “amounted to mis-selling” by the government, a group of MPs has said – after a BBC investigation revealed the Treasury used the analogy in promotional presentations to teenagers a decade ago.
The Treasury Committee’s new report also found students were not clearly told that loan terms could change retrospectively, and called for an urgent U-turn on the decision to freeze the income threshold at which some graduates start repaying their loans. Last year, Chancellor Rachel Reeves announced that the repayment threshold for Plan 2 loans – taken out by students in England between September 2012 and July 2023, and still issued in Wales – would be frozen at £29,385 between 2027 and 2030, instead of rising with inflation.
“MPs say government comparing student loans to phone contracts 'amounted to mis-selling' and call for threshold freeze U-turn.”
Freezing that threshold means graduates start repaying their loans sooner, or pay more as their salaries increase while the threshold remains the same. The committee noted that while government student loan policies are exempt from consumer protection laws, it expects the government “to comply with not only the law, but basic fairness and common decency”.
Oliver Gardner, founder of campaign group Rethink Repayment, said the inquiry had concluded “what we have known for years. The student loan system is unfair, unsustainable and in urgent need of reform.” Lewis Wilson, from the National Union of Students, said the next Labour administration could bring in “immediate fixes” by raising the repayment threshold and lowering the repayment rate, but said the system needed “fundamental reform” in the coming years.
Laura-May Nardella, now 31, said she remembered having her future loan repayments compared to a mobile phone contract when she was a teenager. Looking at her 2025 repayments, she said: “I’ve paid over £…” – suggesting hundreds of pounds a month, far from the £30 figure used by the government.
Both the government and the Student Loans Company said the committee had made “an important contribution” to the student finance debate. A spokesperson for the Student Loans Company said they “recognise the importance of ensuring that students and borrowers across all repayment plans have access to clear, accurate and timely information about student finance”. A government spokesperson said ministers were “already taking decisive action” and would “continue to look for ways to make the system fairer for students, graduates and taxpayers in a financially sustainable way”. The committee, however, remains unconvinced – and with graduates like Nardella facing bills that dwarf the promises made to them as teenagers, the call for reform is growing louder.