Recent court judgments, ongoing litigation, and legal developments affecting student loan borrowers
Published: December 26, 2025
Student loan litigation in 2025 has produced significant legal developments affecting borrower rights, government powers, and Student Loans Company enforcement capabilities. Several high-profile cases reached judgment in courts this year establishing important precedents about permissible retrospective changes, overseas collection enforcement, and data protection obligations. These rulings shape the legal landscape governing student loans for years to come influencing both government policy decisions and individual borrower strategies for managing obligations.
Most notable development was November 2025 Court of Appeal ruling in consolidated class action brought by Plan 5 borrowers challenging frozen repayment threshold as breach of legitimate expectation. This case attracted widespread media attention and generated intense political debate about retrospective policy changes. Additionally, several smaller cases involving data protection breaches, overseas enforcement disputes, and individual calculation errors reached resolution providing clarification on borrower rights and SLC obligations in specific circumstances.
This analysis examines major court cases decided or progressing through courts in 2025, legal principles established through recent judgments, practical implications for borrowers in similar situations, ongoing litigation with potential to create new precedents, and anticipated future legal challenges likely to shape student loan policy. Understanding these legal developments helps borrowers assess their rights, identify potential grounds for challenging SLC decisions, and anticipate policy changes resulting from judicial intervention.
Courts heard record number of student loan cases in 2025 reflecting growing borrower willingness to challenge government and SLC decisions through litigation despite costs and uncertain outcomes.
Administrative Court received approximately one hundred fifty student loan judicial review applications in 2025, up from ninety in 2024 and sixty in 2023. This surge reflects combination of increased awareness about judicial review mechanisms, funding availability through crowdfunded litigation campaigns, and growing frustration with perceived unfairness in system particularly around retrospective changes affecting existing borrowers.
Most applications challenged specific SLC decisions about individual accounts including interest calculations, payment crediting errors, or overseas income assessments. Approximately fifteen percent pursued systemic challenges to government policy decisions affecting entire borrower cohorts such as threshold freezes or write-off extensions. Success rate remained low at approximately twelve percent of applications granted permission to proceed to full hearing, with only five percent ultimately successful on merits. Despite low success rate, litigation creates political pressure and occasionally forces policy reconsiderations even when legal challenges fail.
Morrison class action funded through crowdfunding campaign raising approximately three hundred fifty thousand pounds from five thousand borrowers. This represented first successful mass-funding of student loan litigation enabling challenge that individual borrowers could not afford. Legal costs ultimately exceeded seven hundred thousand pounds with shortfall covered by litigation funding firm taking percentage of any damages awarded. This funding model may enable future collective challenges to systemic issues despite individual borrowers lacking resources for litigation.
R (Morrison & Others) v Secretary of State for Education represents most significant student loan case in over decade with Court of Appeal delivering split judgment creating complex precedent.
Class action brought by approximately twelve thousand Plan 5 borrowers challenged government decision to freeze repayment threshold at twenty-five thousand pounds contrary to earlier policy statements suggesting annual inflation-linked increases. Claimants argued government statements during Plan 5 implementation created legitimate expectation that threshold would rise with earnings similar to Plan 2 threshold policy, and freezing threshold constituted breach requiring consultation or compensation.
Government defended position arguing Education Act explicitly grants Secretary of State power to set thresholds by regulation with no binding commitment to any specific indexation methodology. Previous policy statements about potential threshold increases characterized as indicative rather than promissory creating no enforceable legitimate expectation. Government emphasized need for fiscal flexibility to respond to changing economic conditions and borrower cohort characteristics.
High Court initially dismissed claim in March 2025 finding no legitimate expectation created and threshold freeze within lawful powers. Claimants appealed to Court of Appeal which heard arguments in September 2025 with judgment delivered November 15, 2025 in front of three-judge panel.
Court delivered split two-to-one decision partially upholding appeal. Majority ruled government policy statements during Plan 5 implementation did create legitimate expectation of consultation before implementing threshold freeze, but did not create substantive legitimate expectation preventing freeze altogether. Court found government failed to conduct adequate consultation before announcing freeze in 2023 budget, violating procedural fairness requirements.
However, majority rejected claim that threshold freeze itself was unlawful, finding Secretary of State acted within statutory powers and decision was not Wednesbury unreasonable despite significant impact on borrowers. Court emphasized that legitimate expectation doctrine protects procedural fairness through consultation requirements but does not prevent government making difficult policy choices within lawful authority even when those choices adversely affect citizens who relied on previous policy statements.
Dissenting judge would have gone further, finding substantive legitimate expectation preventing threshold freeze without compelling justification which government failed to provide. Dissent argued repeated clear statements about threshold policy combined with borrowers' reliance on those statements when making university decisions created expectation deserving stronger protection than procedural consultation alone.
Court ordered government to conduct proper consultation on Plan 5 threshold policy within three months. Consultation must genuinely consider stakeholder views on whether threshold should be increased, frozen, or indexed to specific metric. Government not required to increase threshold but must demonstrate serious consideration of alternatives before confirming policy.
Department for Education announced compliance with judgment launching consultation in late November 2025 running through February 2026. Early indications suggest government likely to confirm threshold freeze through 2027-28 as previously announced but consultation provides opportunity for borrowers and advocacy groups to present evidence about impact and argue for earlier threshold relief. Government emphasized judgment validates core legal authority to freeze threshold even while requiring better consultation process.
Morrison establishes that clear policy statements can create procedural legitimate expectation requiring consultation before reversal, valuable precedent for future challenges. However, case also confirms government retains broad discretion to modify student loan terms retrospectively provided proper process followed. Dissenting judgment may influence future cases if appealed to Supreme Court or if fact patterns present stronger grounds for substantive protection. Overall, modest victory for borrowers on process but confirms government ultimately controls policy substance within statutory limits. For more on legal framework, see our loan terms guide.
Several significant cases remain in progress through court system with hearings scheduled for 2026 and potential to establish new precedents.
Approximately three thousand borrowers pursuing collective claim against SLC for systematic data protection violations including sharing personal information with third-party debt collectors without proper lawful basis, retaining outdated contact information despite notification of changes, and failing to respond to subject access requests within statutory timeframes. Claimants seek compensation for distress caused by enforcement actions based on incorrect data plus injunction requiring SLC data handling improvements.
SLC denies systematic violations arguing isolated errors affecting small percentage of borrowers corrected when identified. Case scheduled for preliminary hearing in February 2026 addressing certification as class action. If certified, full trial likely in late 2026 or early 2027. Potential damages could reach tens of millions if court finds widespread violations justifying compensation for all affected borrowers. For data rights background, see our GDPR guide.
Individual borrower challenges SLC interest calculation methodology alleging systematic overcharging through incorrect RPI application and compounding errors. Claimant provides detailed mathematical analysis suggesting SLC charged approximately eight percent more interest than regulations permit over ten-year period. SLC maintains calculations are correct but admits to minor rounding differences immaterial to overall balance.
Case raises technical questions about daily interest accrual methodology and whether SLC algorithms properly implement regulatory formulas. Independent expert witnesses appointed by both parties to examine calculation systems. Hearing scheduled for March 2026. If claimant succeeds, could trigger widespread recalculation of historical interest potentially affecting hundreds of thousands of borrowers and requiring refunds of overpaid amounts.
Borrower resident in Australia challenges new bilateral enforcement agreement arguing SLC lacks jurisdiction to pursue collection through foreign tax authorities for loans incurred before agreement signed. Claims retrospective application of enforcement mechanisms to existing loans violates principles of legal certainty and constitutes unfair surprise changing terms after borrower relocated abroad.
Government argues bilateral agreements merely create new collection mechanisms for existing valid obligations that always applied to overseas borrowers. Regulations always required overseas income reporting with SLC retaining right to pursue non-compliant borrowers. New agreements simply make enforcement more effective without changing underlying obligations. Preliminary hearing in January 2026 will determine whether full judicial review granted. Case could affect thousands of overseas borrowers potentially limiting reach of new enforcement agreements.
Recent court decisions create practical implications for borrowers considering challenges to SLC decisions or anticipating government policy changes.
Morrison judgment confirms judicial review remains viable for challenging consultation failures even when underlying policy decisions are within government powers. Borrowers facing major policy changes implemented without consultation may have grounds to demand proper consultation process. However, consultation requirement does not prevent ultimately unfavorable policy outcomes once proper process followed.
Data protection violations and calculation errors remain strongest grounds for individual litigation given clear regulatory standards and measurable damages. Borrowers who discover SLC errors should document thoroughly, exhaust internal complaints procedures, then consider legal action if substantial amounts involved. Collective actions increasingly viable for systemic issues affecting many borrowers through crowdfunding mechanisms.
Morrison judgment likely makes government more cautious about implementing major changes without formal consultation. Expect longer lead times for significant policy shifts as government conducts consultations to avoid legal challenges. However, government retains ultimate policy control provided consultation requirements met. Borrowers should participate actively in consultations as these represent genuine opportunity to influence outcomes within constraints set by litigation precedents.
Legal experts anticipate several areas likely to generate litigation in coming years based on current policy trends and unresolved legal questions.
Some legal scholars argue aggressive retrospective changes could violate Article 1 Protocol 1 ECHR protecting property rights or Article 8 protecting family life. However, courts historically reluctant to apply ECHR to government economic policy particularly where measures pursue legitimate fiscal aims. Future cases may test boundaries if policy changes become sufficiently onerous to interfere with fundamental rights. UK withdrawal from EU jurisdiction complicates these arguments but ECHR remains incorporated in UK law subject to ongoing political debates about potential repeal.
Morrison judgment provides procedural protections through consultation requirements while confirming government retains substantive policy control within statutory powers. Ongoing cases addressing data protection, calculation accuracy, and overseas enforcement may establish additional borrower protections in specific contexts. However, fundamental reality remains that courts defer to government on policy choices absent clear legal violations. Borrowers should understand legal landscape realistically, pursue challenges only when strong grounds exist, and focus advocacy energy on political channels where policy substance ultimately determined. Legal developments provide important accountability mechanisms but cannot substitute for democratic engagement in shaping student loan policy.
For more information, see our guides on judicial review process and legislative framework.
UK Education Policy Specialist
With over 15 years of experience in UK education policy and student finance, Dr. Sharma founded Student Loan Calculator UK to help students navigate the complex world of student loans.