Loan interest is currently charged at the rate of Retail Prices Index (RPI) plus up to 3%, depending on how much a graduate earns.<\/p>\n
Badenoch said she would cap the interest charged to RPI only, which is currently 3.8%, arguing it would help a higher number of students pay off their debts. <\/p>\n
The Conservative leader wrote: “I am horrified at what graduates today are dealing with, and this is one of the reasons millions of young people feel they’ve been stitched up.”<\/p>\n
The Conservative-Liberal Democrat coalition government introduced Plan 2 loans in 2012 and tripled tuition fees to up to \u00a39,000 a year. <\/p>\n
The Plan 2 loans were phased out across England in 2023 but still apply in Wales.<\/p>\n
Repayments for the loan begin once a graduate starts earning above \u00a328,470 at roughly 9% of income earned above the threshold. <\/p>\n
Payments are largely deducted automatically through the tax system.<\/p>\n
The government announced the Plan 2 threshold would be frozen at \u00a329,385 for three years from April, 2027.<\/p>\n
A freeze would mean workers earning above that amount will be dragged into making larger repayments on their student loans than if the thresholds had risen in line with inflation.<\/p>\n
Reeves defended the measure pledged in the November Budget, describing the student loan system as “fair and reasonable”. <\/p>\n
Interest fees will decrease as inflation drops, Reeves said.<\/p>\n
However, some Labour MPs have criticised the Plan 2 system, including deputy leader Lucy Powell who called it “unfair” and “egregious” last week.<\/p>\n