Phone contract comparisons 'amounted to mis-selling' student loans, MPs say

A group of MPs on the Treasury Committee has stated that comparing student loan repayments to phone contracts or cinema tickets "amounted to mis-selling" by the government. In a new report, the committee also criticized the lack of clear communication to students that loan terms could change retrospectively and called for a U-turn on the decision to freeze the income repayment threshold for Plan 2 loans. The threshold was frozen at £29,385 between 2027 and 2030 by Chancellor Rachel Reeves, meaning graduates start repaying their loans sooner or pay more as their salaries increase with inflation. The committee's report referenced a BBC investigation that found the government compared student loan repayments to £30-a-month phone contracts in promotional presentations to teenagers a decade ago, which the MPs deemed inaccurate for higher earners. While the government's student loan policies are exempt from consumer protection laws, the committee said it expects the government to comply with "basic fairness and common decency." Both the government and the Student Loans Company acknowledged the committee's contribution to the debate. Laura-May Nardella, a Cambridge graduate, shared her experience of being told her loan repayments would be like a mobile phone contract, but now pays hundreds of pounds a month. She noted that despite being a higher earner, her overall debt has increased due to interest accruing at a rate of 6.2%, describing the psychological difficulty of the Plan 2 loan system. Campaigners and the National Union of Students called for fundamental reform of the student loan system, which they described as unfair and unsustainable.