UK minister defends changes to student loans as criticism mounts

Lucy Rigby told the Treasury select committee on Wednesday that student loans are very different from commercial loans. Photograph: WIktor Szymanowicz/NurPhoto/Shutterstock View image in fullscreen Lucy Rigby told the Treasury select committee on Wednesday that student loans are very different from commercial loans. Photograph: WIktor Szymanowicz/NurPhoto/Shutterstock UK minister defends changes to student loans as criticism mounts Lucy Rigby tells MPs heavily subsidised system gives the government the right to alter terms of existing agreements Ministers have rejected accusations that recent changes to student loans are unfair, arguing that they are so heavily subsidised that the government has the right to alter their terms. Pressure has been intensifying on the UK government to reform the student loans system but the chief secretary to the Treasury, Lucy Rigby, told MPs on Wednesday that less than half of young people go to university, and the government had to bear in mind “fairness to taxpayers as a whole”. The current 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 , so the sums they owe get bigger. The catalyst for the row was Rachel Reeves’s decision last year to freeze the salary threshold for plan 2 loan repayments for three years. The above-inflation interest rates that apply to many loans have also come under fire. Student loans inquiry responses show ‘massive scale of frustration and upset’ The consumer campaigner Martin Lewis has said that changing the terms of the loans “would not be allowed for any commercial lender – it would go against all forms of consumer law”. At a Treasury select committee on Wednesday, Rigby was asked whether she thought it was fair that any government could vary the terms of people’s loans. She said that, for most people who want to go to university, “you couldn’t get a commercial loan because you don’t have the credit history, you don’t have the collateral, you certainly wouldn’t be able to get something which you could write off if you don’t hit certain repayment thresholds”. She added: “Student loans, despite having the name they have, are really very, very different as a product … to a commercial loan. Because they are so heavily subsidised , the government has the right … to change some of those terms of the loan.” The committee is holding an inquiry into student loans and the taxation of graduates.