Slideshows that compared student loan repayments to a mobile phone contract and YouTube videos that omitted the fact that loan terms could change have been branded mis-selling by the government, a group of MPs has concluded.
In a new report, the Treasury Committee said promotional material used by successive governments to sell Plan 2 loans to teenagers was “inaccurate for higher earners” and “amounted to mis-selling”. The committee also called on ministers to reverse last year’s decision by the chancellor, Rachel Reeves, to freeze the repayment threshold at £29,385 between 2027 and 2030, instead of raising it with inflation.
“MPs say government's use of phone contract comparisons to promote student loans amounted to mis-selling.”
Plan 2 loans were taken out by students in England between September 2012 and July 2023, and are still issued in Wales. Graduates automatically repay 9% of their income above the threshold. Freezing that level means they start repaying sooner or pay more as their salaries rise while the threshold stays the same.
The committee’s report, published on Tuesday, referenced a BBC investigation that found the government compared student loan repayments to £30-a-month phone contracts in presentations a decade ago. 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.”
Laura-May Nardella, now 31, said she remembered having her future repayments compared to a mobile contract when she was a teenager. “If I look at my 2025 repayments, I’ve paid over £3,000,” she said.
The committee said it expected the government “to comply with not only the law, but basic fairness and common decency”, noting that student loan policies were exempt from consumer protection laws. It also highlighted that the Student Loans Company had not made it clear enough in the application process that the government could retrospectively change terms and conditions. A survey conducted by the committee received more than 52,000 responses; more than half said they had not understood the terms before taking out the loan.
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”.
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. The committee said successive governments had “taken the politically convenient option of loading burdens on to younger generations, hoping that they will not notice until future years”.