LONDON â Prospective university students in England will receive clearer warnings about student loans after MPs criticised the way borrowing and repayments were previously explained.
Updated guidance will state more prominently that repayment terms can be changed through legislation. It will also explain how salary, career breaks and working patterns can affect the total amount repaid.
The change follows a Treasury Committee investigation that described elements of previous student loan promotion as âmis-sellingâ. However, it does not cancel debt, reduce the 9% repayment rate or provide compensation to existing borrowers.
Why the guidance is changing
MPs objected to government-backed material that compared student loan repayments with everyday costs, including a roughly ÂŁ30-a-month mobile phone contract. They also said applicants were not told clearly enough that governments and Parliament could later change loan conditions.
The revised guidance will give applicants a more direct explanation of that risk before they borrow. The official student loan terms and conditions for 2026-27 set out the repayment plans, interest rules and borrower responsibilities.
Students will also be shown why the amount borrowed is not the only factor determining lifetime repayments. Salary progression, part-time employment, retraining and career breaks can produce very different outcomes for people with similar balances.
Ministers have resisted providing a single lifetime repayment forecast, arguing that earnings over several decades cannot be predicted reliably.
What it means for Plan 2 and Plan 5 borrowers
Plan 2 generally applies to eligible undergraduate courses started in England between September 2012 and July 2023. Its repayment threshold for 2026-27 is ÂŁ29,385 a year.
Borrowers repay 9% only on income above that thresholdânot 9% of their full salary. Someone earning ÂŁ35,000 would therefore have repayments calculated on ÂŁ5,615.
Interest is calculated separately. This means deductions can leave a borrowerâs salary while the outstanding balance falls slowly or continues rising. Swikblogâs guide explains why some graduates keep owing more despite making repayments.
A major unresolved issue is the planned freeze of the Plan 2 threshold at ÂŁ29,385 for three years from April 2027. If wages rise while the threshold remains unchanged, a larger portion of earnings can become subject to the 9% deduction.
The Treasury Committee called for the freeze to be reversed, but the government has not committed to doing so.
For September 2026 to August 2027, the relevant RPI figure is 4.1%. A standard RPI-plus-three-percentage-point calculation could have produced a maximum Plan 2 interest rate of 7.1%, but the government has imposed a temporary 6% cap.
The cap limits interest added to qualifying balances. It does not reduce monthly salary deductions. More detail is available in this explanation of the 6% UK student loan interest cap.
Students entering under Plan 5 face different terms. Its 2026-27 repayment threshold is ÂŁ25,000, with repayments generally set at 9% of income above that amount. Interest and write-off rules also differ from Plan 2.
The government has rejected calls to place student loans under the Financial Conduct Authorityâs Consumer Duty, arguing that state-backed education loans are different from commercial credit. It has also announced no compensation for graduates who believe the original terms were inadequately explained.
Existing borrowers do not need to reapply or change their arrangements. The immediate reform concerns how future applicants are informed. Questions over the Plan 2 threshold freeze, use of RPI and repayment rate remain unresolved.
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