Powell says student loan system at top of in-tray

Lucy Powell, the newly appointed education secretary, has declared that reforming the student loan system is a top priority. Powell stated her commitment to ensuring the system is "fair" for graduates, particularly those with Plan 2 loans, whose interest rates she previously described as "egregious."

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I think it's not just about the threshold of when people start to pay it back, but also the interest rate which is RPI [retail prices index] plus 3%.

Powell, who has personal familiarity with the issue as her eldest child holds a Plan 2 loan, indicated that the focus extends beyond the repayment threshold to include interest rates, which are currently set at RPI plus 3%. She reiterated her past criticism, stating, "I think I've called it in the past egregious and I'm not going to change my opinion on that just because I'm now the secretary of state."

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I think I've called it in the past egregious and I'm not going to change my opinion on that just because I'm now the secretary of state.

While Powell cannot make definitive promises about changes, she emphasized the urgent need for review. The government has committed to examining the issue, which Powell considers a "real cost-of-living issue" for young people struggling with high repayments that often do not cover the loan's principal. She noted that many graduates pay significant amounts without ever reducing the initial loan amount.

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I can't make any promises, but it needs looking at.

Recent reports have highlighted concerns about the student loan system. MPs on the Treasury Committee criticized comparisons made by the government between student loan repayments and consumer contracts, calling it "mis-selling." Previously, the government had announced a freeze on the repayment threshold for Plan 2 loans and capped interest rates on some loans at 6%. Kemi Badenoch, a Conservative leader, had also proposed capping interest rates at RPI only.

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They're paying high repayments and never, ever paying off the capital of their student loan.