A significant inquiry into England’s student loan system has been launched by Members of Parliament (MPs), coinciding with alarming new data revealing that a third of the public now questions the value of a university degree. The National Union of Students (NUS) has called for an examination of the repayment threshold and interest rates, while the government maintains that the existing system safeguards lower-earning graduates through income-linked repayments. This inquiry comes amidst growing public unease regarding student debt and its long-term implications.
Rising Concerns Over Degree Value
According to the latest findings from the British Social Attitudes survey, 34% of respondents in 2025 believe that pursuing a university education “just isn’t worth the amount of time and money,” a notable increase from 14% in 2005. This shift marks the highest level of scepticism about degrees in two decades. Additionally, the belief that university attendees are “a lot better off” financially has declined sharply, from 50% in 2005 to just 36% in 2025.
This increasing apprehension about the value of higher education has prompted the Treasury Select Committee to gather insights from graduates regarding their financial burdens. Many graduates, particularly those who took out Plan 2 loans between 2012 and 2023, have expressed frustration over accumulating debt.
The Burden of Student Debt
Gemma, a graduate who now works in the tech sector, epitomises the struggles faced by many. After graduating in 2016 with a debt of £34,105, she now finds herself owing £41,908 due to the relentless accumulation of interest, which is outpacing her repayments. Despite feeling that her degree was worthwhile, enabling her to rise from a low-income background to a job with a salary nearing £50,000, the burden of her loan has affected her personal life decisions, such as postponing starting a family.
“I feel like I’m constantly chasing a debt that gets bigger over time; it feels like climbing a mountain,” she stated, highlighting the psychological toll of her financial situation. Graduates like Gemma are not alone; over 50,000 individuals have submitted written evidence to MPs, many of whom claim they were not fully informed about the terms of their loans when they enrolled.
Calls for Reform in Loan Repayment System
The current repayment structure requires graduates in England to pay back 9% of earnings over a set threshold, which is expected to remain frozen at £29,385 from April 2027 for a period of three years. This freeze means that more graduates will begin repaying their loans sooner, a move the NUS has urged the government to reconsider. Alex Stanley from the NUS emphasised the need for a long-term reassessment of the graduate repayment programme to prevent a generation from being unable to afford homes or start families.
Vivienne Stern MBE, Chief Executive of Universities UK, acknowledged the challenging labour market but argued that graduates tend to have better job prospects and overall well-being. Furthermore, she asserted that the benefits of a university education extend beyond the individual, fostering a more skilled workforce essential for national growth.
During the inquiry, Sir Philip Augar, who previously chaired a review of post-18 education, underscored the need for corrections to the terms governing Plan 2 loans. He cautioned against changing terms in a piecemeal manner, which has contributed to the current state of unease among graduates.
The Role of Government in Student Financing
Stern and Augar both advocated for a system that feels fair and transparent, urging the government to better balance the responsibilities between the state and individuals regarding loan repayments. They suggested that highlighting actual monthly repayment amounts rather than the overall debt could help alleviate the psychological burden faced by graduates.
In response to these concerns, the government defended its decision to freeze the repayment threshold, stating that it has capped the interest on Plan 2 loans at 6% and increased the repayment threshold for the first time since 2021.
Why it Matters
The growing skepticism regarding the value of university degrees and the rising burden of student debt underscore a critical juncture in higher education policy. As graduates grapple with the financial implications of their education, the need for reform in the student loan system becomes increasingly urgent. Addressing these issues is not just about alleviating individual hardships; it is about ensuring that future generations can pursue higher education without the overwhelming fear of crippling debt, thus safeguarding the long-term economic health of the nation.