Political Party Student Loan Policies: Where Each Party Stands in 2026
The government has announced no reform. The Conservatives and Liberal Democrats have rival proposals that the IFS has costed. Here is what each party has actually said, and who would gain.
Key Takeaways
- Labour is the governing party. Andy Burnham became Prime Minister on 20 July 2026 and Lucy Powell was appointed Education Secretary that week. No student loan reform has been announced, and no formal review with terms of reference has been set up.
- Only two parties have proposals with independent costings from the Institute for Fiscal Studies: the Conservative plan to cut the maximum Plan 2 interest rate to RPI, and the Liberal Democrat plan to uprate the Plan 2 threshold with average earnings every year.
- The two plans point in opposite distributional directions. The Conservative proposal concentrates its gains on high earners, with the top 30% saving upwards of £20,000 on average. The Liberal Democrat proposal spreads gains lower down, with the lowest-earning third saving around £10,000 against around £1,000 under the Conservative plan.
- The Reform UK and Green Party positions set out below come from their general election manifestos, as summarised by Universities UK. We have not verified a more recent 2026 policy statement from either party, and neither position has an independent costing.
- None of this changes what comes off your payslip. The 2026-27 thresholds, the 9% repayment rate and the 6% interest cap that starts on 1 September 2026 are the rules that actually apply. Plan on those.
In this article
Student loans moved up the political agenda sharply in 2026. The Treasury Committee published a cross-party report on 7 July calling for the Plan 2 threshold freeze to be reversed. The Institute for Fiscal Studies published costings in February 2026 for the two main opposition proposals. And on 20 July the country got a new Prime Minister and, days later, a new Education Secretary who says the issue is at the top of her in-tray.
What follows is a party-by-party account of what has actually been said and, where independent analysis exists, what it would mean in pounds. Where a party has only a manifesto position rather than a current costed programme, this page says so plainly rather than dressing it up as policy.
How to Read This Page
- These are proposals, not law. With the single exception of the measures the government has already taken, nothing on this page has been enacted. No repayment plan changes because an opposition party has published a policy.
- Only the governing party can legislate. Changes to thresholds, interest and write-off terms are made by the government of the day, through regulations or primary legislation. An opposition proposal is a statement of intent that costs nothing to make.
- Manifesto commitments get revised in government. The clearest example in this policy area is the Liberal Democrats, who pledged to abolish tuition fees in 2010 and then voted to raise them after entering coalition. Treat every pledge here as an indication of direction, not a promise you can budget against.
- Costed and uncosted are not the same. The Conservative and Liberal Democrat proposals have been modelled by the IFS. The Reform UK and Green positions have not, and are drawn from general election manifestos rather than fresh 2026 statements.
For how student loan changes actually pass into law, see our guide to parliamentary loan changes.
The Government: Labour
Labour has been in government since 2024. Andy Burnham, the Labour MP for Makerfield, became Prime Minister on 20 July 2026, replacing Sir Keir Starmer. Lucy Powell, Labour's deputy leader, was appointed Education Secretary in the week of 20 July 2026.
No student loan reform has been announced. That is the single most important fact on this page, because the governing party is the only one that can change anything.
What the Education Secretary has said
On 28 July 2026, Lucy Powell said Plan 2 interest, which she called “egregious”, “needs looking at”, and that student loans are “very much at the top of my in-tray”. She added that she “can't make any promises”.
She characterised the government as having “committed to a review”. No formal review with published terms of reference has been announced, so there is no timetable, no scope and no consultation to respond to. Our fuller write-up is here: Lucy Powell on student loan interest.
The official government line
Responding to the Treasury Committee report, the government said ministers are “already taking decisive action” and will “continue to look for ways to make the system fairer for students, graduates and taxpayers in a financially sustainable way”. That is not a commitment to any specific change.
What the government has actually done
Autumn Budget 2025, 26 November 2025
The then-Chancellor, Rachel Reeves, froze the Plan 2 repayment threshold at £29,385 for three years from 6 April 2027, and also froze the Plan 2 interest rate thresholds for three years. Rachel Reeves served as Chancellor under Sir Keir Starmer and is not the current Chancellor.
Interest cap, announced 7 April 2026
The government capped Plan 2 and Plan 3 interest at 6% from 1 September 2026 for the 2026/27 academic year. The cap applies in England and Wales only, and does not cover Plan 1, Plan 4 or Plan 5. See our student loan interest rates guide for the current rate on every plan.
For the reform levers available to the new administration, and what each would cost, see the reform options facing the Burnham government.
Conservative Proposal: Cut the Maximum Interest Rate to RPI
The Conservatives, led by Kemi Badenoch, propose reducing the maximum Plan 2 interest rate to RPI, removing the above-inflation margin after graduation. Interest would still be charged at RPI plus 3% during study. The IFS modelled the proposal in February 2026.
What the IFS found
- Average lifetime repayments for the 2022/23 starting cohort would fall by around £11,000 in today's prices.
- The 30% of graduates with the highest lifetime earnings could save upwards of £20,000 on average.
- The share of that cohort repaying in full would rise from around half to around two-thirds.
- Most graduates would see no change to their monthly repayment, because repayments depend on earnings, not on the size of the balance.
- The bottom third of earners would see average annual repayments fall by at most £135 a year, or £11 a month, in today's prices. That saving peaks in their late 40s and adds up to around £1,000 over a lifetime.
- The cost is around £4 billion in today's prices if applied only to the 2022/23 starting cohort, spread over roughly 30 years.
The catch for existing borrowers: the proposal does not appear to include retrospective removal of interest already accrued by earlier cohorts. If you graduated years ago and have watched a large interest balance build up, this would not undo it.
Liberal Democrat Proposal: Uprate the Threshold with Earnings
The Liberal Democrats propose increasing the Plan 2 repayment threshold every year in line with average earnings growth, instead of freezing it for three years and then uprating it with RPI. That restores the indexation rule that applied before the 2022 reforms. They also propose an independent watchdog to oversee student loan repayment terms, covering thresholds, interest rates and repayment conditions.
What the IFS found
- By April 2029 the threshold would reach around £31,710, against £29,385 under current policy.
- Graduates earning above £31,710 would repay around £210 a year, or £17 a month, less in 2029-30. Those earning between £29,385 and £31,710 would benefit on a sliding scale.
- Average lifetime repayments would fall by around £8,000 in today's prices.
- Graduates in the third and fourth deciles of lifetime earnings benefit most, saving around £14,000. The lowest-earning third save around £10,000, against around £1,000 under the Conservative proposal.
- The very highest earners may repay slightly more in total, because they repay more slowly and so accrue more interest, unless they make voluntary early repayments.
What it does not do: the Liberal Democrats have not committed to reversing the freeze in the interest rate thresholds, which is the separate measure that determines which borrowers pay the top rate.
The 2010 precedent
Any Liberal Democrat commitment on student finance carries a history. The party pledged to abolish tuition fees in 2010, then voted to raise them after entering coalition government. That is not an argument against the current proposal on its merits, but it is the reason this page treats every manifesto pledge as a direction of travel rather than a guarantee.
Conservative vs Liberal Democrat: The Only Two Costed Plans
These two proposals are directly comparable because the IFS modelled both in the same February 2026 analysis. All figures are in today's prices.
| Measure | Conservative | Liberal Democrat |
|---|---|---|
| Core change | Maximum Plan 2 interest cut to RPI after graduation, RPI plus 3% still applies during study | Plan 2 threshold uprated with average earnings growth every year |
| Plan 2 threshold in April 2029 | £29,385, unchanged from current policy | Around £31,710 |
| Effect on monthly repayments | None for most graduates, because repayments depend on earnings, not on the balance | Around £17 a month less in 2029-30 for those earning above £31,710 |
| Average lifetime repayment cut | Around £11,000 for the 2022/23 starting cohort | Around £8,000 |
| Lowest-earning third | Around £1,000 over a lifetime | Around £10,000 over a lifetime |
| Biggest winners | The 30% with the highest lifetime earnings, upwards of £20,000 on average | Third and fourth deciles of lifetime earnings, around £14,000 |
| Very highest earners | Among the largest gainers | May repay slightly more in total, unless they make voluntary early repayments |
| Published cost | Around £4 billion for the 2022/23 cohort alone, over roughly 30 years | No comparable cost figure among the IFS figures we have |
| Institutional change | None proposed | Independent watchdog over thresholds, interest rates and repayment conditions |
The distributional contrast in one line
Cutting interest helps the people who would otherwise clear their balance, and those are high earners. Raising the threshold helps everyone earning above it, and matters most to people whose salary sits close to it. So the Conservative plan is worth more at the top, and the Liberal Democrat plan is worth more in the middle and at the bottom.
The clearest single number is the lowest-earning third: around £10,000 saved under the Liberal Democrat plan, against around £1,000 under the Conservative one. Model your own position with the monthly repayment calculator.
Reform UK
Source and status: the pledges below are drawn from Reform UK's general election manifesto, as summarised in Universities UK's analysis of party manifestos. They are not a current 2026 policy statement, and we have not verified a more recent position.
Reform UK pledged to scrap interest on student loans, extend the repayment period to 45 years, and restrict undergraduate numbers.
Two of those pull against each other for borrowers. Removing interest stops the balance growing, which helps anyone at risk of never clearing it. Extending the repayment period from the current 30 years on Plan 2 to 45 years keeps deductions coming out of your pay for an extra 15 years, which increases the total repaid for people who would otherwise have reached write-off. No independent costing of the combined package is among the figures we have.
Nigel Farage leads Reform UK. He resigned as an MP on 8 July 2026, triggering a by-election in his seat, where he intends to stand for re-election.
Green Party
Source and status: these are manifesto commitments, not a costed current programme, and we have not verified a more recent 2026 position.
The Green Party, led by Zack Polanski, commits to restoring maintenance grants and ending tuition fees, with the stated goal of making education free for UK students.
This is the most far-reaching position of any party covered here, and also the least specified. There is no published detail among our sources on what would happen to loans already taken out, which is the question that matters most to existing borrowers.
The Cross-Party Position: Treasury Committee
The Treasury Committee is a cross-party select committee, chaired by Dame Meg Hillier. Its student loans report, published on 7 July 2026, carries weight precisely because MPs from different parties signed up to it.
Reverse the threshold freeze
The Committee wants the Plan 2 repayment threshold freeze undone at the next Budget.
Link interest to CPI, not RPI
RPI is the higher measure in most years and still sets the basis for every plan's interest rate.
Move towards a 50:50 funding balance
In the long term, the Committee wants the cost of a degree split more evenly between the graduate and the taxpayer.
Full coverage: the Treasury Committee student loans report.
Campaign Groups and Student Bodies
Two non-party voices have shaped the 2026 debate. Neither can legislate, but the first has the most far-reaching proposal that anyone has bothered to cost.
Rethink Repayment
Rethink Repayment is a campaign group founded by Oliver Gardner. It is not a political party and has no seats. Its proposal is to raise the threshold to £31,200 in April 2026 and then uprate it with average earnings, and to cut the repayment rate from 9% to 5%.
The IFS found this would cut the share of borrowers fully repaying from around half to around 30%, and that almost all borrowers would repay less each month and over a lifetime. The cost to the exchequer would be substantial. It is a larger change than either the Conservative or the Liberal Democrat proposal.
National Union of Students
Lewis Wilson of the NUS has said the administration could make immediate fixes by raising the repayment threshold and lowering the repayment rate, with fundamental reform needed in the coming years.
What This Means for Your Repayments
Nothing on this page except the government's own measures affects your deductions. Here are the rules that actually apply in 2026-27.
| Plan | Threshold | Rate | Write-off |
|---|---|---|---|
| Plan 1 | £26,900 | 9% above threshold | 25 years |
| Plan 2 | £29,385 | 9% above threshold | 30 years |
| Plan 4 | £33,795 | 9% above threshold | 30 years |
| Plan 5 | £25,000 | 9% above threshold | 40 years |
| Postgraduate, Plan 3 | £21,000 | 6% above threshold | 30 years |
Settled right now
- The RPI basis is 4.1%, applying 1 September 2026 to 31 August 2027
- Plan 2 interest runs from 4.1% to an uncapped 7.1% by income, held at the 6% cap since 1 September 2026
- Plan 5 interest is RPI only, 4.1%, with no margin
- Maximum full-time tuition fee is £9,790 in 2026/27, up from £9,535 in 2025/26
- The Plan 2 threshold freeze from April 2027 remains government policy
Still open
- Whether the government launches a formal review, and with what scope
- Whether the threshold freeze is reversed at a future Budget
- Whether interest moves from RPI to CPI
- Whether any future change applies retrospectively or to new borrowers only
Practical advice: do not defer study, delay a career move or change an overpayment plan on the strength of a proposal. Opposition parties cannot enact anything, and the governing party has announced nothing. If you are weighing voluntary overpayments, the question is still whether you are on track to clear your balance before write-off, which you can test with the overpayment calculator.
Sources
- Institute for Fiscal Studies, Options for changing Plan 2 student loans: costs, benefits and distributional effects, February 2026. ifs.org.uk
- Liberal Democrats, “Our plan to fix the student finance system and support graduates”. libdems.org.uk
- Treasury Committee news release, “Government has moral obligation to reverse freezing of student loans repayment threshold”, 7 July 2026. committees.parliament.uk
- GOV.UK, “Interest rate cap introduced to protect Plan 2 borrowers”, 7 April 2026. gov.uk
- Universities UK, “What do party manifestos say about higher education?”, for the Reform UK and Green Party positions. universitiesuk.ac.uk
Frequently Asked Questions
Which party has actually changed my student loan repayments in 2026?▼
Labour, because Labour is in government. Two measures matter. At Autumn Budget 2025 the then-Chancellor froze the Plan 2 threshold at £29,385 for three years from 6 April 2027 and froze the Plan 2 interest rate thresholds for three years. On 7 April 2026 the government capped Plan 2 and Plan 3 interest at 6% from 1 September 2026, in England and Wales only. Opposition proposals change nothing until the party proposing them is in government and legislates.
Has the government announced a student loan review?▼
Not formally. On 28 July 2026 the Education Secretary, Lucy Powell, said Plan 2 interest was “egregious” and “needs looking at”, that student loans are “very much at the top of my in-tray”, and that she “can't make any promises”. She characterised the government as having “committed to a review”, but no review with published terms of reference has been announced, so there is no scope, timetable or consultation to respond to.
Would the Conservative interest proposal cut my monthly repayment?▼
For most graduates, no. Repayments are 9% of earnings above the threshold, so the size of your balance does not set the monthly figure. The effect is on the total repaid over a lifetime and on how many people clear their balance. The IFS puts the average lifetime cut at around £11,000 for those who started courses in 2022/23, with the highest-earning 30% saving upwards of £20,000 and the lowest-earning third saving around £1,000.
Which proposal is better for low earners, the Conservative one or the Liberal Democrat one?▼
The Liberal Democrat one, by a wide margin. The IFS found the lowest-earning third would save around £10,000 over a lifetime under the Liberal Democrat threshold plan, against around £1,000 under the Conservative interest plan. Graduates in the third and fourth deciles of lifetime earnings do best of all under the Liberal Democrat plan, saving around £14,000. The Conservative plan concentrates its benefit on the highest earners, who are the people most likely to repay in full.
Are the Reform UK and Green Party positions current 2026 policy?▼
No. Both are general election manifesto positions, taken from Universities UK's analysis of party manifestos, and we have not verified a more recent statement from either party. Reform UK pledged to scrap interest on student loans, extend the repayment period to 45 years and restrict undergraduate numbers. The Green Party commits to restoring maintenance grants and ending tuition fees, with the goal of free education for UK students. Neither position has an independent costing among our sources.
Do manifesto pledges on student loans usually survive contact with government?▼
Not reliably. The best known example in this policy area is the Liberal Democrats, who pledged to abolish tuition fees in 2010 and then voted to raise them after entering coalition government. Manifesto commitments are a guide to a party's direction, not a schedule you can plan your finances around. Budget on the rules in force today and treat any improvement as a bonus.
Related Resources
Treasury Committee Student Loans Report
The cross-party findings behind the pressure to reverse the threshold freeze
Lucy Powell on Student Loan Interest
What the new Education Secretary has and has not committed to
Reform Options for the Burnham Government
The levers available to the new administration and what each would cost
Plan 2 Threshold Freeze Guide
How the 2027 to 2030 freeze works and what it costs you
Student Loan Calculator UK Editorial Team
Editorial Team
This page is maintained by the Student Loan Calculator UK editorial team, checked against GOV.UK and Student Loans Company guidance. Read more about our editorial approach.