Student Loan Repayments

Emma Best AM moved, and Alessandro Georgiou AM seconded the following motion:

“This Assembly wishes to express its opposition to the Chancellor's decision in the Budget to freeze the salary threshold for Plan 2 student loan repayments for three years. 

Of the 5.8 million people who took out a student loan between September 2012 and July 2023, a significant number live and work in London. These Londoners contribute a substantial amount of tax revenue to the Exchequer, with many hard working middle and higher-earning graduates already facing a 50% marginal tax rate. 

The Institute for Fiscal Studies estimates that the average Plan 2 Graduate needs to earn £66,000 a year just to keep pace with the interest on their loan. As a result, Plan 2 loan graduates have seen the balance they owe rise for years and now owe more than when they graduated, despite making repayments in every payslip. 

This Assembly notes that the Plan 2 students loan system was brought in by the Coalition Government in 2012, following their decision to treble the cost of higher education, by increasing tuition fees to £9000 per year.

The Assembly also notes that by linking the interest rate to inflation, the high inflation experienced under the previous Government significantly increased the interested rate being charged on Plan 2 student loans.

The Government's decision to freeze the salary threshold for repayments is fundamentally unfair, punishes hard-working young people, and is clearly contrary to how the Plan 2 system was designed when it was introduced. 

The Assembly wishes to note Martin Lewis' comments that the Chancellor's decision to freeze the threshold is 'not moral'. 

The Assembly, therefore, calls on: 

• The Government to abolish real interest rates on Plan 2 Student Loans, ensuring balances will never rise faster than RPI inflation and saving graduates thousands of pounds over the 30 year repayment period. The Government should also explore additional ways to make the Plan 2 student loans system more progressive.
• The Mayor to publicly support this proposal, and recognise the tax contributions made by Plan 2 graduates living and working in London.”

Following debate, and upon being put to a vote, the motion was agreed with 14 votes being cast in favour and 0 votes being cast against.