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Never go to war with Martin Lewis. The one iron law of politics is that the financial guru who built moneysavingexpert.com has a quasi-godlike status in Britain, the man millions trust with their cash in a way they would never trust any politician. If he takes up a cause, he usually wins. So when Lewis joined the revolt against recent changes to the student loan system, urging young graduates to lobby their MPs in protest, trouble was never going to be far behind.
And now apparently it’s here. Last week, the Green party leader, Zack Polanski, called for “a conversation about student debt forgiveness”, echoing a rallying cry among young Democrat voters at the last US election for loans to be written off faster (though he didn’t explain where he would find the billions that would cost). Shortly afterwards, five former education secretaries – including Labour’s David Blunkett – publicly backed a Sunday Times campaign for admittedly more modest reforms to student finance. It looks like the slow-burning anger of graduates who went to university in England and Wales between 2012 and 2023 – on a plan that walloped them with higher interest rates than those who went before or after – is finally starting to set Westminster alight.
Student loan repayments of up to 9% means some of these so-called Plan 2 graduates face effective marginal tax rates of 49% or more, in England and Wales, where even the super-rich pay only 45%. It’s a generational injustice that rankles: why are young people being squeezed proportionately harder in some cases than their bosses? Isn’t it tough enough already to save up for a first flat, or start a family, without hanging yet more millstones round their necks?
And then there’s the dispiriting sense of throwing money into a bottomless pit. Since only the highest earners will ever contribute enough to outrun that galloping interest rate and actually clear the loan, many of the rest are now realising that despite years of conscientiously paying their dues, their debts have actually grown rather than shrunk. (Even when you’re on maternity leave, the interest keeps ticking up relentlessly.) The 29-year-old Labour backbencher Nadia Whittome recently pointed out that even she has managed to make only a £1,000 dent in her £49,600 debt after six years on an MP’s salary, so how on earth is anyone else supposed to do it? Though anything this crop of graduates still owes will be written off after 30 years, that still potentially leaves them paying well into middle age for decisions made back in sixth form.
What really tipped rebellious graduates over the edge, however, was the chancellor Rachel Reeves’ decision in the budget to freeze the threshold (the salary level where graduates have to start repaying) at £29,385 for Plan 2 until 2030, squeezing a few more millions out of them. Her argument that graduates are now better off, thanks to falling interest rates, cut no ice with Lewis, who argues that it’s not what graduates signed up to, and that moving the goalposts like this isn’t “a moral thing” to do. Enter the Greens, who promised in their last manifesto to scrap student loans altogether, and who are now palpably keen to capitalise on what the pollster YouGov says is an emerging lead over Labour among the under-30s.
Student debt forgiveness never used to feature in political conversation on this side of the Atlantic, but then nor did leaving college with average debts of £53,000 – or more if you do a master’s, as young people increasingly feel panicked into doing if they want to bolster their CVs in a hideously competitive jobs market. (Startlingly, English students now graduate with higher average debts even than Americans, whose system has always been a byword for cripplingly expensive fees.) If anything, the backlash is only likely to grow as the next lot of post-2023 students – who faithfully did what their teachers said they should do and worked hard to get to university – begin graduating into a jobs market that didn’t have enough genuine graduate opportunities to go round, even before AI started gobbling up entry-level work.
I was speaking at a university careers fair at the weekend, packed with almost frighteningly impressive students who are keen enough to turn up on a Sunday to polish their internship applications but who still find themselves wading through rejection letter after rejection letter. This is the supposed golden ticket for which, after graduating, some may be expected to pay for in their 60s. (Though thankfully they face lower interest rates than the Plan 2 generation, which ought to make the debt easier to clear, these younger graduates will start repaying earlier – in fact as soon as they earn £25,000, dangerously close to what will soon be minimum wage – and for longer, with debt only finally written off after 40 years).
Britain may well now be at the beginning of a painful transition towards higher taxes for everyone, at least if it wants both to fix its public services and bolster its defences against a rising global threat in a hurry. The long peace dividend that made things like free university education possible is over, replaced by what might be called the Trump tax, or the unwanted price of living in a world made more dangerous by the US losing its bearings. But to start that transition by squeezing the young, rather than those old enough to have actually benefited from the good times while they lasted, feels completely backwards. If we are in this, the generations should all be in it together.
The fairest option is probably to cap how much any student should have to pay over their lifetime, so that loans bear some resemblance to what was borrowed rather than just morphing into a kind of stealth graduate tax. But that would be expensive, most likely requiring a shake-up of the university system into the bargain.
Though more apprenticeships might be part of the answer, they can’t simply be magicked out of thin air. (Apprentices need actual work to learn on, which requires an economy growing strongly enough to create it.) If anything, the UK has spent too long arguing in circles about how many people should go to university and not enough time thinking about what they do when they get there. One option is to offer shorter and cheaper degrees, compressing three years’ study into two – which should be easier than it was, given how many universities have already cut teaching time or shifted to teaching over two semesters rather than three terms.
But if the government has better options, then let’s hear them sooner rather than later. The young, unsurprisingly, are in a hurry.
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Gaby Hinsliff is a Guardian columnist
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