Sir Keir Starmer has committed to assisting students, informing MPs he will explore methods to enhance the fairness of the student loan system.
This comes as the Prime Minister’s official spokesman suggested that ministers might consider reducing interest rates and adjusting the repayment threshold on student loans.
During Prime Minister’s Questions, the Labour leader attributed the escalating costs of student loans directly to the Conservative government, following questioning from Kemi Badenoch.
The Conservative leader has previously vowed to decrease the interest paid on certain student loans amidst widespread concerns regarding their expense.
Following the November budget presented by Chancellor Rachel Reeves, the salary threshold at which loan repayments commence will be frozen at £29,385 for three years, a decision expected to result in increased payments for many graduates.
Interest on Plan 2 loans is charged at the rate of RPI inflation plus up to 3 per cent, depending on how much a graduate earns.
Mrs Badenoch has announced plans to restrict this to RPI only, saying this would help higher numbers of graduates pay off their debt.
Ministers could be looking at changes to the threshold and interest rates, Sir Keir’s spokesman suggested, stressing they are keeping “under review the ways in which we can make life better for graduates”, when pressed on both elements.
In the Commons, Mrs Badenoch said the “system is now at breaking point for graduates, I believe that student loans have become a debt trap”.
She pressed the Prime Minister to cut interest rates on student loans.
Sir Keir replied: “I have to say I was glad to learn that the leader of the Opposition has finally admitted that they scammed the country on this, and that applies to everything they did in government.
“We inherited their broken student loans system. We’ve already introduced maintenance grants to improve the situation, which they scrapped, and we will look at ways to make it fairer, and we will do other things within the economy to help students.”
Mrs Badenoch went on to ask if graduates are paying more or less under Labour, to which Sir Keir did not directly respond.
He said under the previous government, “inflation was at 11% which crippled the state of finances for students as their loan rates went up”.
Mrs Badenoch said: “The fact is, graduates are paying more, not less.”
She accused Sir Keir of “taking from students to give to Benefit Street”.
Sir Keir replied: “What a nerve.
“Under their government, student loan thresholds were frozen for 10 years, 10 years.
“They broke the system, they did it with a bloke over there when they were in coalition together, and we’re fixing it.”
Mrs Badenoch continued to press the Prime Minister to reverse changes to student loans at the spring statement next week.
Sir Keir’s spokesman later told reporters “I won’t get ahead of the spring statement” when asked whether it could include the issue.
The official said “work continues” on the matter but declined to give any more details or a timeframe, saying “we’ll update when we have one”.
Consumer champion Martin Lewis has also urged the Chancellor to reverse her decision on student loans.
Appearing on ITV’s Good Morning Britain on Monday, he said the changes would be struck down by the regulator if a commercial company tried to make them.
“Structurally, it’s horrible, it’s a breach of contract, it is not moral, Chancellor, you need to reverse that decision and give students what they were promised. The threshold needs to go up with average earnings,” he said.
Mrs Badenoch and Mr Lewis are due to meet to discuss student loans on Wednesday afternoon, after a fiery exchange about the issue on the TV programme on Monday.
Mrs Badenoch’s spokesman insisted the Tories were not “doing this for electoral maths” in order to win around graduates to voting for the party.
He added: “We’re doing this because this is an obvious problem and we have a fully costed solution.”
