Align Plan 2 student loan interest rates with Plan 5 (RPI only).

Background

We call on the government to remove the +3% 'real' interest rate from Plan 2 loans and cap interest at RPI, as is the case for students who started after 2023.

Additional details

Plan 2 graduates are the only cohort charged interest above inflation, creating an unfair 'middle-earner trap' where balances grow despite regular repayments. Furthermore, the government has frozen the Plan 2 threshold at £29,385 until 2030. As wages rise with inflation, this acts as a stealth tax. We ask that the threshold also be adjusted annually in line with the Retail Price Index (RPI).

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