Committee publication · Correspondence · 13 May 2026
Correspondence from Jas Athwal MP, on student loans, dated 28 April 2026
From: Treasury Committee
Summary
Jas Athwal MP writes to the Treasury Committee inquiry into student loans, submitting constituent testimony and policy arguments. He documents cases of debt ballooning despite repayments, critiques high interest rates (capped at 6% but still excessive), and warns of £30 billion write-offs by the 2040s. He proposes aligning rates to Bank of England base rate, reforming interest accrual timing, improving financial education, subjecting the Student Loans Company to FCA regulation, and addressing marginal tax rates reaching 71% for high earners.
Key findings
- Constituent cases: one graduate's debt rose from £64,000 to £99,000 after four years of repayments; another's from £29,000 to £36,000 over the same period.
- Interest accrual exceeds repayments: between 2023–24, interest added to loans was three times the value of repayments; 68% of 2022/23 cohort borrowers expected never to repay fully.
- Treasury cost: Plan 2 write-offs in the 2040s projected at £30 billion, over 100 times current costs; graduates save £2,000 less annually toward house deposits than non-borrowers.
- Marginal tax rates: Plan 2 graduates earning £50,000 face 51% marginal rates; those earning £100,000–£125,000 face 71%, the highest in Europe for this income band, disincentivising promotion.
- Systemic issues: interest accrues from year one of university (before realistic repayment capacity); women penalised by interest accruing during maternity leave; frozen repayment thresholds erode trust and worsen cost-of-living impact.
Tone
CriticalTopics
Key actors
Jas Athwal MP, Dame Meg Hillier MP, Student Loans Company, Institute for Fiscal Studies, Financial Conduct Authority, Bank of England, Oxford Economics
Notable line
“We cannot afford to kick the can of reform down any longer – to do so risks leaving an entire generation behind and destabilising future public finances.”
Key Quotes
“One constituent left university with £64,000 of student debt. After four years of making repayments, he now owes more than £99,000.”
“… between 2023-24, the interest added to loans has been three times the value of repayments”
“Aligning student loan interest rates more closely with the Bank of England's base rate would help ensure that graduates can see their outstanding debt fall over time.”
“An additional concern is the motherhood penalty, in which interest on student loans continues to accrue while women are on maternity leave, with reduced or no income.”
“Once a graduate on Plan 2 earns £50,000, they will face a marginal tax rate of 51% once the loan deduction is taken.”
“It feels as though my ambition is quite literally capped at £50,000.”
Source · parliament.uk record ↗