Most graduates say maximum student loan interest unfair – survey

The majority of graduates say the maximum student loan interest is unfair, a survey has found, as most say fairer policies would affect their vote.

Campaigns platform Organise and Rethink Repayment said the student loans system “increasingly points to the hallmarks of mis-selling”.

It comes amid rising anger about the student loans system and changes made at the autumn budget, which Chancellor Rachel Reeves described as “fair and reasonable”.

The survey of 3,209 graduates found 87% said the maximum interest rate on Plan 2 student loans of 6.2% is unfair.

Additionally, 84% said fairer student loan policies would influence their vote at the next election.

Roxy Khan-William, head of campaigns at Organise, said: “The evidence increasingly points to the hallmarks of mis-selling: complex terms, optimistic assurances, underplayed risks, and later rule changes that materially worsen outcomes. In effect, the Government is acting like a loan shark.”

One 31-year-old respondent to the survey said: “At 17, I would not be deemed suitable by lenders for a £2,000 loan for a car, let alone a £57,000 loan to which I received no contract, fixed rates, or terms and conditions.”

Asked in the survey how student loan debt had affected their quality of life, graduates said it had made affording a mortgage more difficult, exacerbated cost-of-living concerns, and made parents feel penalised for taking leave for having children.

Organise and Rethink Repayment is calling for the Chancellor to reverse the decision in the budget to freeze the repayment threshold for Plan 2 student loans, and also for a pause on interest being added to loans during maternity or parental leave.

Plan 2 loans were issued to English students who started their undergraduate courses between 2012/13 and 2022/23.

At the autumn budget, the Government announced the repayment threshold for Plan 2 loans, which is set to rise to £29,385 in April 2026, will be frozen for three years, which will mean more graduates will start making repayments earlier than they would have if the threshold increased with inflation.

The Institute for Fiscal Studies (IFS) said last week freezes announced at the budget alone would increase the average student loan repayments made over a lifetime by around £3,000 for those who started at university in 2022, with impacts for those who started before that likely to be similar or slightly smaller.

“Several respondents recall being reassured at school that the loan was safe and fair, only to discover years later that interest could outstrip repayments and that balances could grow despite paying every month,” the survey report states.

“Others say they would never have taken the loan had they understood how the interest worked or that the rules could change after the fact.”

After a student with a loan graduates, interest is added to it at the rate of Retail Price Index (RPI) inflation, plus up to 3% depending on how much a graduate is earning.

The maximum interest is currently 6.2% because the rate of inflation is at 3.2% as of September 2025.

Health Secretary Wes Streeting has said a debate on the system is “worth having”, acknowledging that currently it feels tough for young graduates.

A Government spokesperson said: “We recognise the concerns among borrowers. The student loans system was designed and implemented by previous governments. We’re making the tough but fair decisions needed to protect taxpayers and students now and for future generations of students and workers.

“We have set an ambitious target of two-thirds of young people studying degrees or gold-standard apprenticeships by the age of 25, and we are supporting students with the cost of university by increasing maintenance loans every year in-line with forecast inflation and reintroducing targeted maintenance grants.

“The student finance system is heavily subsidised by Government, and lower-earning graduates will always be protected, with any outstanding loan and interest cancelled at the end of the repayment term.

“It is right that those who are able to repay do so and under this system, where repayments are determined by income not total borrowed, graduates earning some of the highest salaries in the country contribute more towards the repayment of their student loan than workers who did not attend university or graduates on the lowest salaries.”