Treasury on course for windfall from graduate cohort

This article appeared as part of the Daily Sensemaker newsletter – one story a day to make sense of the world. To receive it in your inbox, featuring content exclusive to the newsletter, sign up for free here.

Labour announced last week that interest on Plan 2 student loans, issued between 2012 and 2022, will be capped at 6% from September. But expect fresh controversy now it has emerged that the Treasury will make a profit of £679m on those who began undergraduate degrees in 2022/2023. This is due to freezes to the repayment threshold made by the Tories in 2022 and Labour in 2025. As a result male graduates from the cohort will pay an extra £13,400 on average over their lifetimes, and female graduates an extra £16,900. The National Union of Students and the Higher Education Policy Institute, which jointly commissioned the report, have proposed a marginal repayment rate, which will see the threshold lowered but graduates contribute a smaller proportion of their income.