Comparing student loan repayments to a £30-a-month phone contract or a cinema ticket “amounted to mis-selling” by the government, a cross-party group of MPs has concluded. In a scathing report published on Tuesday, the Treasury Committee said students were not clearly told that loan terms could change retrospectively, and demanded the government reverse its decision to freeze the income threshold at which graduates begin repaying their loans.
The freeze, announced last year by Chancellor Rachel Reeves, will keep the Plan 2 repayment threshold at £29,385 between 2027 and 2030 instead of rising with inflation. Graduates with Plan 2 loans – taken out by students in England between September 2012 and July 2023 and still issued in Wales – automatically pay back 9% of earnings above that threshold. Freezing the threshold means they start repaying sooner or pay more as their salaries rise.
“MPs say government mis-sold student loans by comparing repayments to phone contracts.”
The committee’s report cited a BBC investigation that found the government had used the phone-contract comparison in promotional presentations to teenagers a decade ago. For higher earners, that comparison was “inaccurate”, the MPs said, and therefore amounted to mis-selling. While student loan policies are exempt from consumer protection laws, the committee said it expected the government “to comply with not only the law, but basic fairness and common decency”.
Oliver Gardner, founder of the 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,” he added. 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 argued the system needed “fundamental reform” in the coming years.
Now-31-year-old Laura-May Nardella remembered being told as a teenager that her future loan repayments would be like a mobile phone contract. In reality, she said, her monthly payments total hundreds of pounds. “If I look at my 2025 repayments, I’ve paid over £3,000,” she said.
Both the government and the Student Loans Company described the committee’s work as “an important contribution” to the student finance debate. A Student Loans Company spokesperson said they “recognise the importance of ensuring that students and borrowers across all repayment plans have access to clear, accurate and timely information”. 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 report’s findings heaps pressure on ministers to overhaul a system that campaigners say leaves graduates with spiralling debts and unpredictable repayment terms.