Prime Minister Sir Keir Starmer has announced that the government will explore ways to make the student loans system "fairer," responding to intense questioning from Conservative leader Kemi Badenoch during Prime Minister's Questions on Wednesday, 25 February 2026. This pledge comes amid escalating concerns about the financial burden on graduates, with both political leaders clashing over the impact of loan costs and potential reforms.
Political Showdown Over Student Debt
During the parliamentary session, Ms Badenoch directly challenged Sir Keir, asking if he would commit to cutting interest rates on student loans. In his reply, the prime minister blamed the Conservatives for what he described as a "broken" system inherited by Labour. He highlighted that inflation under the previous government had soared to 11%, severely affecting students' finances as loan rates increased. Sir Keir stated, "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."
Conservative Proposals and Labour's Response
Earlier in the week, Ms Badenoch had promised that if elected, the Conservatives would reduce interest on some student loans by restricting charges to the Retail Price Index (RPI) only, rather than the current rate of RPI plus up to 3%, depending on earnings. She argued this change would assist more graduates in repaying their debt. At PMQs, she accused Sir Keir of "taking from students to give to Benefit Street," claiming that graduates are paying more under Labour. Sir Keir retorted by pointing out that under the Conservative-led coalition, student loan repayment thresholds were frozen for a decade, exacerbating financial strain.
Details of Potential Reforms
Speaking to reporters after the exchange, Sir Keir's spokesman suggested that ministers are considering various reforms to alleviate graduate debt. These may include slashing interest rates and adjusting the repayment threshold. Currently, Plan 2 student loans—issued to students in England who began courses between 2012 and 2022—carry interest based on RPI inflation plus an additional percentage tied to income. The spokesman emphasized that the government is keeping "under review the ways in which we can make life better for graduates," though he declined to confirm if student loans would feature in the upcoming spring statement by Chancellor Rachel Reeves.
Background and Broader Context
This debate follows Chancellor Reeves' announcement in November's budget to freeze the salary threshold for loan repayments at £29,385 for three years, a move that has forced many graduates to pay more. The issue has gained prominence as part of broader discussions on higher education funding and economic support for young people. Both parties are positioning themselves ahead of potential policy shifts, with Labour focusing on fairness and Conservative proposals targeting interest rate reductions.
The confrontation underscores deep political divisions over education finance, with Sir Keir leveraging the opportunity to criticize past Conservative policies while outlining a commitment to systemic improvements. As the government reviews options, graduates and students await further details on how these pledges might translate into tangible relief from mounting debt burdens.
