Arabic version: حزب المحافظين يقترح خفض أسعار الفائدة على قروض الطلاب

Conservative leader Kemi Badenoch has said her party would cut the rate of interest charged on some student loans issued in the decade up to 2023. Writing in the Sunday Telegraph, Badenoch described the current Plan 2 loans as feeling increasingly like a “scam” for graduates. An estimated 5.8 million people took out Plan 2 student loans between 2012 and 2023.

According to BBC News, Badenoch’s proposal includes capping the interest charged to the Retail Prices Index (RPI) only, which is currently at 3.8%. This move aims to alleviate the financial burden on graduates, many of whom are struggling to manage their student debts.

Currently, the interest on Plan 2 loans is set at RPI plus up to 3%, depending on a graduate’s income. Repayments begin once earnings exceed £28,470, with approximately 9% deducted from income above this threshold. The government announced the Plan 2 threshold would be frozen at £29,385 for three years from April 2027, which could lead to larger repayments for graduates.

Chancellor Rachel Reeves defended the existing student loan system, describing it as “fair and reasonable”. However, some Labour MPs have criticized the Plan 2 system, labeling it as unfair. Welsh Labour leader Eluned Morgan stated that Wales would not follow England’s lead in freezing repayment thresholds, while the Liberal Democrats called for a complete reevaluation of the current system.