Just a short one today. The UK student finance system has been in the news this week. On Monday 23/02/2026, personal finance expert Martin Lewis ‘ambushed’ Conservative party leader Kemi Badenoch on the set of Good Morning Britain, where Ms. Badenoch was being interviewed about her party’s proposals to cut the interest rate for student loans. Lewis argued that those plans would only help those who earn enough to fully clear their debt – a small proportion of those with student loans – and a recent Financial Times analysis of different parties’ alternative proposals has supported that conclusion.
The language of debt
Funding of higher education in England costs the government about £22 billion, according to the Institute of Fiscal Studies, and the UK government has estimated that about 56% of full-time undergraduates starting in 2024/25 would repay their loans in full. As Martin Lewis and others have observed, the language of loans and repayment can create an expectation that every student has to repay the full amount of their loan, and that not doing so makes someone a personal failure or an undue burden on the public purse; as a MoneySavingExpert FAQ answer puts it, “That’s part of the problem of using the language of debt. People feel they’re doing something wrong by not repaying.” This is worsened by the fact that, especially for Plan 2 students with higher interest rates on their loans, repayments can fail to cover the added interest on the outstanding loan, meaning a student’s loan debt continues growing despite their best efforts to repay, when in fact the entire funding system is intentionally designed to allow the taxpayer to subsidise students a variable amount that’s based on earnings after leaving university.
I started at university in 2006, and spent seven years in higher education, leaving in 2013 (I later completed a second undergraduate degree with the Open University while working part-time). Compared to students today, I had it easy. I benefited from a much lower tuition fee cap: 2006 was the year in which tuition fees in England increased from £1,000 per year (means-tested) up to £3,000 (non-means-tested). I was living in Wales then, and applied to Student Finance Wales for a tuition fee loan to cover the full amount, plus a maximum maintenance loan of £3,955, for a total of £6,955 in my first year, or approximately £12,000 in 2026, after inflation. For comparison, students in England in 2025/26 are paying £9,535 just in tuition fees in their first year, and the maintenance loan they can take out has fallen in real terms, due to inflation, making it more difficult to cover living expenses.
Under the terms of my repayment plan (Plan 1), I was due to start repaying my student loan in April 2014, the April after leaving higher education. In April 2015, the first year in which I have a statement of the balance remaining, I owed just over £50,000 to the Student Loans Company, which is almost £70,000 in 2026 after inflation. For comparison, students who finished their courses in 2024 and became liable to repay their student loans in 2025 had an average of £53,000 in debt. These students would be on Plan 2 repayment terms, with higher interest rates – up to a maximum of 7.3% as of December 2025, while mine, as a Plan 1 student, is currently ‘only’ 3.2%.
A better measure: Expected Repayment Remaining
My balance has fallen with my repayments over time, and stands currently at around £44,000. I started to track the outstanding balance in my personal finances from 2023, treating the loan balance as a liability – as if the full loan is repayable, like a commercial loan would be. But the coverage of student finance this week has made me realise that this isn’t the correct way for me – or anyone else – to think about their student loan at all! Under Plan 1 (and since I started at university in September 2006), if I don’t repay the loan 25 years after I became eligible to repay – which for me is 2039 – the remaining amount will be wiped. (For Plan 2 students, it’s 30 years.) So instead of looking at how slowly the balance is declining (or indeed if it’s growing despite repayments!), and stressing about whether it’ll ever be fully repaid, it’s much more sensible to calculate how much I will realistically end up repaying – a measure I’ll call my Expected Repayment Remaining – between now and 2039, based on my current salary.
As it turns out, my Expected Repayment Remaining is coincidentally quite close to my existing balance, meaning that I should end up paying off my loan at around the same time that it would have been wiped. (The projection of repayments so many years into the future involves broad assumptions about salary growth, economic growth, interest rates and government policy, as well as the assumption that I don’t take substantial time out of employment for any reason; any of these could further reduce my Expected Repayment Remaining.)
Crucially, for peace of mind, the Expected Repayment Remaining is ‘decoupled’ from the total remaining balance regardless of how large that balance gets, since the repayment rules limit the maximum that can be taken in repayments. (This becomes obvious if you consider the hypothetical case of a student who has a billion-pound student loan; it’ll just be wiped after 30 years of small-by-comparison repayments.) Many Plan 2 students will be in this situation. Martin Lewis has argued that the way student loan information is presented should account for this, and that students should think of the student loan as a tax-like ‘graduate contribution’, making it a much less scary prospect.
Making changes to the student loan system along these lines would help to prevent cases where students have overpaid their loans only to realise later on that doing so doesn’t actually reduce their Expected Repayment Remaining. Lewis mentions an example of a graduate who overpaid some of her student loan using an inheritance, only to realise afterwards that this made no impact whatsoever, and that the money could not be reclaimed. So, if after reading this, reframing student loans as an Expected Repayment Remaining helps you or someone you know to avoid such costly decisions, it will have been worth it.
Further reading
- Peter Walker, February 2026. Martin Lewis ambushes Badenoch on Good Morning Britain over student loans plan. https://www.theguardian.com/politics/2026/feb/23/martin-lewis-ambushes-kemi-badenoch-good-morning-britain-student-loans. Guardian coverage of Martin Lewis arguing with Kemi Badenoch about student loan interest rates.
- Chris Smyth, March 2026. Lower rates or higher thresholds — how Keir Starmer can make student loans ‘fairer’. https://www.ft.com/content/407d963d-fb05-422f-9df5-16d3815c6757. Financial Times article (paywalled) assessing different political parties’ proposals for changes to the student loans system.
- Paul Bolton, December 2025. House of Commons Library, Research Briefing: Student loan statistics. https://commonslibrary.parliament.uk/research-briefings/sn01079/. Overview of the cost of student financing in England to the UK government and the debt and repayment statistics for English graduates.
- Institute for Fiscal Studies, accessed March 2026. Higher education. https://ifs.org.uk/education-spending/higher-education. Article from the IFS microsite on higher education, providing a detailed explanation of student finance in England in economic terms.
- Martin Williams, July 2017. How students have been misled and lied to for 20 years. https://www.channel4.com/news/factcheck/factcheck-how-students-have-been-misled-and-lied-to-for-20-years. An emotive but fairly accessible history by Channel 4 of changes in student finance between 1997 and 2017.
- Amy Roberts, edited by Hannah McEwen in August 2025. Plan 1 student loan repayment: England & Wales (1998-2011) and Northern Ireland. https://www.moneysavingexpert.com/students/student-loans-repay/. Money Saving Expert article for Plan 1 students on whether it is reasonable to repay a student loan early.
- Amy Roberts, edited by Hannah McEwen in February 2026. Plan 2 student loan repayments – interest is at 6.2%. https://www.moneysavingexpert.com/students/repay-post-2012-student-loan/. Money Saving Expert guide for Plan 2 students on repaying student loans. Includes the case of a graduate who used an inheritance to repay part of her loan, with no ultimate impact on her repayments.
- Tom Ford, 2026. UK Student Loan Calculator. https://www.studentcalc.co.uk/. An online calculator that calculates yearly repayments, based on the loan repayment schedule, income, and assumptions about the UK economy.