00:00Questions are being raised about whether the student loan system is still fair for graduates.
00:05A cross-party group of MPs has launched an inquiry pointing to growing dissatisfaction with repayment terms
00:11and concerns that changes over time may have increased the burden on borrowers.
00:16We inherited their broken student loans system.
00:20We've already introduced maintenance grants to improve the situation, which they scrapped.
00:26And we will look at ways to make it fairer and we will do other things within the economy to
00:32help.
00:33The issue has drawn attention from across the political spectrum, with different parties proposing a range of possible reforms.
00:40The inquiry is focusing on Plan 2 student loans, taken out by those who went to university between 2012 and
00:472023.
00:48Under the current system, graduates begin repaying once their income reaches a set threshold.
00:54That threshold is due to rise slightly before being frozen until 2030.
00:59As a result, some graduates may repay more over time, particularly if earnings increase while the threshold remains unchanged.
01:07We froze the threshold, which Plan 2 student loans are paid back, and we've frozen that for a couple of
01:13years.
01:14That has also been done in the past.
01:15But we're also bringing down inflation.
01:17And, of course, the interest that people are paying on student loans is linked to inflation.
01:24Inflation peaked at more than 11% under the previous government.
01:28That did push up the cost of those student loans.
01:31But by getting inflation down, we can also reduce the interest on student loans.
01:37And I think that will make a big difference in making that more affordable.
01:40Chancellor, you know, you know that you're doing this as fiscal drag, as if student loans were a tax.
01:48But it's not a tax.
01:49It's a contract that the government signed with young people who had not been given any education on these loans.
01:55I do not think it is a moral thing for you to do to be freezing the repayment threshold in
02:00this way.
02:01It's not like tax that we know is variable.
02:03You didn't say the terms were variable.
02:04This isn't right.
02:05Please have a rethink.
02:08Interest rates are also a key concern.
02:10For Plan 2 loans, interest is linked to inflation and can increase depending on how much a graduate earns.
02:19This means higher earners may see their loan grow more quickly.
02:23Political parties have put forward different approaches, including reducing interest rates, reversing the threshold freeze, restoring maintenance grants or writing
02:33off some debt.
02:34However, there is no single agreed solution.
02:37The committee says it will examine whether changes to the system have been fair and whether further reform is needed.
02:44Its findings are expected to inform ongoing political debate as pressure grows on the government to address concerns raised by
02:51graduates.
02:52We inherited a totally broken system when it came to student finance and student loans.
02:58Since we came into office, we are reintroducing maintenance grants for the poorest students who we know are most concerned
03:06about getting into debt whilst at university.
03:09But we are also taking concerted efforts to bring down inflation.
03:15And, of course, the rates of interest charged on student loans for Plan 2, but also for other plans as
03:22well, are linked to inflation.
03:24Inflation got out of control under the previous government.
03:27It fell last week to 3%.
03:29It's expected to fall, according to the Bank of England, to 2% in the next few months.
03:34That will mean that people on Plan 2 and other plans will find their interest rates starting to come down.
03:41It is a contractual loan.
03:42You go abroad, you have to pay it.
03:44That's why it's not a tax.
03:45It was a contract.
03:46In the terms of that contract, when people signed up, they were told the repayment threshold would go up with
03:51average earnings.
03:52The maths was done on the back of that.
03:53I would say to anybody who's saying out there, well, hold on, people who didn't go to have to university
03:57are going to have to pay for these people.
03:59You can have that argument.
04:00Yeah.
04:00I'm talking about natural justice.
04:02A new survey has revealed that around two-thirds of student loan borrowers who responded have seen their debt grow
04:10since leaving higher education.
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