Debt-ridden graduates seen as ‘cash cows’ to fund older people’s lifestyles, MPs told

Graduates saddled with ballooning student loan debts feel they are being unfairly used as “cash cows” to finance measures benefiting older people such as the state pension triple lock, MPs have been told. Student representatives told an official inquiry about the “harrowing” plight of many young people, while the man who led the 2019 government review into post-18 education criticised the “almost sneaky” changes to loan terms, and appeared to compare the situation facing graduates with the car finance and payment protection insurance (PPI) mis-selling scandals. Pressure has been building on the government in recent months to reform the student loans system, with campaigners and politicians queueing up to describe the rules as unfair. The debate has focused on the millions of students from England and Wales who have taken out a “plan 2” loan. Many have money taken from their wages each month to repay their debt, but what they pay off is often dwarfed by the interest that is being added every month, so the sums they owe get bigger. The catalyst for the latest row was Rachel Reeves’s decision to freeze the salary threshold for plan 2 loan repayments for three years. This threshold, above which graduates have to repay 9% of anything they earn, will now stay frozen at £29,385 until 2030. The above-inflation interest rates that apply to many loans have also come under fire. …