A SLOW steady anger is spreading across Britain among those in their twenties and thirties. It is not theatrical. It does not march. But it is corrosive. At its heart lies the student-loan system, and the 5.8 million former students trapped on Plan 2 loans, who now feel that they were sold a financial fiction.
These graduates are paying hundreds of pounds a month in loan repayments, and yet watch their debt climb ever higher. Typically, those who graduated with a debt of £50,000 three years ago, despite paying nine per cent of their income on repayments, find that they still owe £70,000, because, under Plan 2, the more you earn, the more you pay. Those who also borrowed for a Master’s degree pay a staggering total of 15 per cent of their monthly income.
Student loans are often defended on the basis that they are not “real debt” — unlike a £50,000 credit-card bill. They are a quasi-tax on graduates. The interest total may balloon alarmingly, but students pay according to what they earn, not what they owe — and loans are written off after 30 years. No need to panic!
But this argument collapses when confronted with reality. These loans increase your marginal tax rate: graduates earning more than £50,000 pay the State more than 50p of every extra pound earned. That is not abstract economics: it is a monthly payslip shock.
The ethical problem is deepening with the Government’s decision to freeze repayment thresholds. Graduates who signed up post-2012 were told, explicitly, that thresholds would rise with average earnings. Now the Chancellor, Rachel Reeves, is making graduates pay earlier. If she were a used-car salesman, by changing the terms of a contract like this she would have broken the law.
Retrospective changes violate principles of natural justice. That’s why almost half of the British now support writing off some or all student debt — because, instinctively, it feels morally wrong.
Student loans were originally supposed to expand access to university. In theory, anyone can attend university, regardless of family income. In practice, research suggests that tuition fees deter poorer students from applying, reinforcing inequality.
Wealthier families avoid student loans entirely, paying fees upfront; there is no “graduate tax” for their offspring. Middle-income earners, who will repay the most over the decades, are delaying getting married, buying a home, and starting a family. And poorer graduates pay for longest. The canny choose merchant banking over teaching. It is not a system designed to promote a flourishing society.
Ms Reeves says that asking graduates to contribute more is necessary, to fund the NHS. She claims that it is unfair for non-graduates to share the cost of university education. This is a dodgy populist argument: why should the healthy fund the sick or single adults pay for schools? Because our society is held together by shared investment.
All this threatens to erode young people’s confidence in politics. Even younger MPs feel personally betrayed by the system. This is not just about money: it is about trust. If young people cannot see a viable future in Britain — a way to study, work, contribute, and still build a life — then the problem is not merely student finance. Repairing it will cost far more than can be written on the Chancellor’s balance sheet.
