Powell says student loan system a top priority

A senior Member of Parliament has reiterated her criticism of the interest rates applied to Plan 2 student loans, describing the charges as “egregious.” The MP, who has previously highlighted the burden of rising interest on graduates, said she remains unchanged in her assessment that the current rates are unfairly high and disproportionately affect borrowers with lower incomes.

Plan 2 loans, introduced in 2012, apply to students who began their courses after 2012 and charge interest that rises with inflation, currently set at the Bank of England base rate plus a margin. Critics argue that the combination of inflation‑linked rates and a high margin creates a debt trap for many graduates, especially those who graduate into low‑wage sectors. The MP’s statement follows a broader debate in Parliament over potential reforms, including proposals to cap interest or adjust the calculation methodology.

The MP called on the Treasury to review the interest structure and to consider measures that would reduce the long‑term cost of borrowing for students. She added that the government’s recent policy announcements have not addressed the core issue, and she remains ready to push for legislative changes to protect new graduates from excessive debt burdens.