Ministers lay out plans to reduce gap between poorest and most affluent pupils – UK politics live | Politics

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The education secretary is asked about the growing anger of the cost of student loans which has escalated since the chancellor’s decision last November to freeze the salary threshold for “plan 2” student loan repayments for three years.

Rachel Reeves said the salary at which plan 2 student loans must be paid back would be frozen at £29,385 for three years starting from next April. It means borrowers will have to pay even more towards their student loans as they benefit from pay rises.

Plan 2 loans were taken out by students from England who started university between September 2012 and July 2023, and students from Wales who have started since September 2012. Graduates have to repay 9% of everything they earn over a threshold – now £28,470 a year.

Interest on the loans is charged at the rate of RPI inflation plus up to 3%, depending on how much a graduate earns. The Tories, which introduced the loans in the coalition government, have now promised to limit the rate on the loans to the retail price index (RPI) in a move that will heap further pressure on the Treasury.

Asked on Sky News how she will help loan 2 graduates saddled with huge amounts of debts, Phillipson said:

double quotation markNow I get the problem. I see the issue. In reality, as a government, you have to look at a question of priorities and what you can do and how fast you can do it. Given the shape of what we have in the public finances, this is really hard.

Phillipson said she is bringing in maintenance grants for less well-off students. “The threshold for repayment is going up this year. It will then, in future years, be frozen.”

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