Bradley Thomas, MP for Bromsgrove and the Villages, has voted to abolish real interest rates on Plan 2 Student Loans.
However, the Government voted against the motion in the House of Commons earlier this month (March 18th).
The motion also called on the Government to stop the freeze on repayment thresholds which acts as a stealth tax, forcing low-to-middle earners to repay more.
At the Autumn Budget in 2025, the Government announced it was freezing the repayment thresholds from 2027-28 until 2029-30, an effective tax rise on graduates that Martin Lewis called ‘not a moral thing’ to do.
If it had passed, abolishing real interest rates would have ensured student loan balances never rise faster than RPI inflation, benefitting millions of English undergraduates who started courses between 2012-13 to 2022-23.
Bradley believes the Plan 2 Student Loans model is broken as high-earners repay less than middle-earners, who repay far more than they borrowed, while low-earners repay nothing. The Times reported that a graduate on £150,000 with £40,000 of student loans repays just £46,220 over 11 years, while someone on £50,000 with identical debt repays £80,000 over 28 years, double the original sum, before their loan is written off.
Bradley said:
“I’m proud to have voted to abolish real interest rates on Plan 2 Student Loans, ending the unfair treadmill in which high interest rates cause student debt to rise faster than graduates in Bromsgrove and the Villages can pay it off.
“It’s disappointing the Government voted against this plan. Instead, they’re continuing with their policy of freezing the repayment thresholds from 2027-28 until 2029-30 – effectively a stealth tax on anyone with a Plan 2 Student Loan.
“Whether its expanding high-quality apprenticeships, abolishing Stamp Duty or abolishing real interest rates on Plan 2 Student Loans, we must do more as a country to support young people to reach their full potential.”
