Uprate Plan 2 repayment threshold and cap student loan interest.

Background

Change Plan 2 student loan rules so the repayment threshold rises each year with average earnings, and cap Plan 2 interest at inflation (RPI) for existing and future borrowers. Reverse the 2027–2030 threshold freeze.

Additional details

Freezing the Plan 2 repayment threshold at £29,385 from April 2027 for three years increases repayments through fiscal drag, especially for low and middle earners. ​ Plan 2 interest can be RPI plus up to 3%, so balances may grow despite repayments. ​ Student loans are presented as a contract; retrospective-style worsening of terms may be legal but feels unfair and undermines trust.