MPs condemn student loan mis-selling and demand reversal of repayment threshold freeze

MPs on the Treasury select committee have ruled that government promotion of student loans in England and Wales amounted to mis-selling, following an investigation into how financial products were marketed to prospective students. The committee identified serious shortcomings in official communications, including slideshows that compared loan repayments with mobile phone contracts and YouTube videos that failed to mention terms could change, leaving graduates vulnerable to unexpected financial burdens. The cross-party group also called on ministers to reverse last year's controversial decision to freeze the repayment threshold for Plan 2 loans at £29,385 for three years from April 2027. Chancellor Rachel Reeves' announcement of the freeze sparked significant concern among student representatives, with the committee now arguing that the government has a moral obligation to honour the original terms under which students agreed to borrow. The findings raise important questions about financial transparency in higher education funding and the relationship between government policy and student finance. For local authorities supporting care leavers and vulnerable young people into university, the report highlights the need for careful advice when guiding students through complex loan agreements that may not reflect the stable repayment terms initially promised.