Martin Lewis has directly addressed Rachel Reeves, urging her to backtrack on the government’s ‘immoral’ changes to student loan repayments.
Last November, the chancellor announced Labour would be freezing the threshold at which graduates begin to repay their student loans.
From April 2027, the salary at which graduates on plan 2 loans must start repaying their student debt will be frozen at £29,385 for three years.
Those who took out a student loan between 2012 and July 2023 are on plan 2.
The plans have been criticised by a number of voices though, amid growing anger over ballooning student debt in the UK thanks to the interest being charged on plan 2 loans.
READ NEXT: Hundreds of millionaires and billionaires call for higher taxes on super-rich – Full list here
One of those who has been critical of the plans is financial expert Martin Lewis, who has argued the threshold freeze will effectively act as a form of fiscal drag as inflation continues and wages increase.
He has now issued a direct plea to Reeves to roll back the policy, saying he believes the freeze is “not a moral thing to do.”
Speaking on Newsnight, the Money Saving Expert looked directly down the camera and delivered a message for the chancellor.
“Chancellor, you know that you’re doing this as fiscal drag as if student loans were a tax – but it’s not a tax,” he said.
“It’s a contract that the government signed with young people who have not been given any education on these loans. I do not think it is a moral thing for you to do, to be freezing the repayment threshold in this way.”
Lewis pointed out that the loans are “not like tax, which we know is variable.”
“You didn’t say the terms were variable, this isn’t right, please have a rethink.”
There has been renewed attention and focus on student debt and the plan 2 loans in recent weeks after data showed the interest being charged on the loans meant that many students now owe more than they did when they finished university.
House of Commons data showed £15bn in interest had been added to the total amount of student debt owed in 2024-25, with just £5bn having been repaid by graduates.
This has brought the total amount of student debt owed to the government to £270bn.
Many have accused governments of the last decade of changing the terms of the loans by charging interest at RPI inflation on the debt, plus up to three per centage points depending on earnings.
Critics have also pointed out that those least impacted by the debt are the wealthiest who have been able to pay off their loans in one go, making it a regressive system.
Reeves has defended the loan system, telling LBC it is still “fair.”
She told the broadcaster: “Well, it is important that you don’t have to start paying back the student loan until you earn enough money.
“And that is the point of the student loan system, that you get the loan, you get that great university education and you only pay it back if you afford, if you can afford to do so.
“And obviously after a period of time, that gets written off entirely.
“So if you are able to get a job that pays a good wage, you’ll pay that money back quicker.
“But if you’re never able to repay, that loan will eventually be written off. I think that is a fair system.
“Around half of people go to university today, but half don’t. And it is not right that people who don’t go to university are having to bear all the cost for others to do so.”
The government estimates that half of students will never pay back their loans in full, with the debt written off after 30 years.