Student loans inquiry finds many did not understand terms

Here is the latest breaking news from around the world: Student loans inquiry finds many did not understand terms 11 minutes ago Share Save Add as preferred on GoogleVanessa Clarke ,Senior education reporterandEmily HoltGetty ImagesThousands of people have told a government inquiry that they did not understand the terms and conditions on their student loans before they took them out. More than 52,000 people responded to a call for evidence by the Treasury Committee for its inquiry on the taxation of graduates - more than half said they did not understand what they had signed up for. The inquiry is looking at all student loan plans in England and whether repayment terms are "reasonable".

Treasury Committee chairwoman Dame Meg Hillier, said "the massive scale and strength of frustration and upset is powerful. "The inquiry was launched following controversy over Plan 2 loans, which were issued in England between September 2012 and July 2023 and are still issued in Wales. Graduates with Plan 2 loans pay back 9% of everything they earn over the repayment threshold which currently stands at £28,470.

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The government has said that from 2027 to 2030, the threshold will remain frozen at £29,385 rather than rising with inflation. That means graduates will effectively start repaying sooner and those earning above the threshold will see a greater proportion of their salary subjected to student loan repayments than they would have done. In April, after the inquiry was launched, the government said interest on some student loans in England will be capped at 6% in the next academic year to protect graduates from the risk of rising inflation due to the Iran war.

Campaigners have welcomed this but called for wider reforms to the system. Alex Stanley, vice-president of the National Union of Students, said the data showed "how damning the situation is". "Students and graduates already knew this was the case, because we are living it.

Governments have repeatedly changed the terms, in a move that no bank could do, making the conditions worse while we have no option but to take the financial hit". Ollie Gardner, founder at Rethink Repayment, which campaigns for student loan reform, added: "They are preventing many from reaching key life milestones such as buying a home, starting a family and saving for retirement, simply because they chose to pursue higher education. "As part of its inquiry, the committee invited anyone over the age of 16 to share their experiences of the system.

The story has become one of the most prominent items on the global agenda.