Tom Rutland

It is a pleasure to serve under your chairmanship, Ms Lewell. I want to thank my constituents Matthew, Courtenay, Frances, Giovanni and Veronica, who have contacted me recently about this, and parents such as Joanne who are worried about generational inequality. There are, to my mind, two problems with the plan 2 loan system. The first is psychological. It is incredibly depressing for people to see the amount that they owe continually increasing, despite making payments that can constitute hundreds of pounds each month. The second, more important one is financial. Under plan 1, as my earnings grew, I was making increasingly large monthly payments towards my student loan, but I knew that this was a temporary situation and I would eventually be debt-free. For those on plan 2 loans, it is not anything like so temporary, primarily due to the size of the principal and the higher rate of interest it attracts. That has a real impact, because the economic circumstances students are graduating into today are a world apart from those of their predecessors, who enjoyed free higher education. Today’s graduates face higher housing costs and a reduced graduate wage premium compared with previous generations. Those factors combine with high monthly repayments to reduce disposable income and leave young workers in stasis, living at home with their parents or in shared rental accommodation, perhaps partnered and wanting to start a family but unable to afford to do so. We have inherited this broken system, but we have the opportunity and responsibility to fix it, making changes to increase the monthly disposable income of graduates by raising the repayment threshold or staggering the percentage of income above the threshold that is repaid, and looking at the interest rate paid falling at a minimum to RPI or, ideally, to CPI, given that the Government are phasing out RPI.