ITV GMB Martin Lewis clashes with Kemi Badenoch over student loans

Ms Badenoch appeared to discuss her party’s proposed pledge to cut the amount of interest paid on some student loans amid widespread concerns over costs.

The Tories have promised to limit the rate on Plan 2 loans to the retail price index (RPI) in a move that will heap further pressure on the Treasury.

Following Chancellor Rachel Reeves’ November budget, the salary threshold at which repayments kick in under the system will be frozen at £29,385 for three years, leading to many having to pay more.

Interest on Plan 2 loans is charged at the rate of RPI inflation plus up to 3%, depending on how much a graduate earns.

The Conservative leader has announced plans to restrict this to RPI only, which the Tories argue would help higher numbers of graduates pay off their debt.

However, Money Saving Expert Martin Lewis, also appearing on GMB this morning, said the move would not help lower and middle earning graduates.

Mr Lewis said: “If you want to help the middle earning students the most important thing is the repayment threshold should be increased. When the Tories brought this in it was a graduate contribution scheme.”

In response, the Conservative leader said: “This is exactly why young people are suffering. We have a lot of people who finished university where they did not have to pay fees, didn’t have to take out loans, and now you are saying nothing can be done.”

Before Mr Lewis replied: “I am not saying nothing can be done, I am saying what you should do.”

He added: “I 100 per cent agree in principle and I have objected to it since the Conservatives brought it in in 2012. I have said we should not have above inflation interest rates.

“Lowering the interest rates will not only help those who can clear within the first 30 years which means lower and middle earning graduates won’t benefit from that change.

“If you have ££1 billion to help students the most direct thing that would help all students would be not freezing the repayment threshold, it would be increasing the repayment threshold.”

Yesterday (February 22), the Education Secretary has said she will “look at” Plan 2 student loans amid widespread concerns over repayment costs, but refused to commit to changing the system.

Bridget Phillipson insisted she wanted “fairer” arrangements for graduates but warned that the Government was dealing with “a question of priorities” when asked whether the burden would be eased.

Speaking to broadcasters on Sunday, Ms Phillipson said it was “galling that the very people who designed, implemented and delivered that system are now complaining about the fundamental problems that they see within it”.

She also hit out at suggestions to reduce the number of people entering university, which she said were coming from those who “had the benefits of a university education” themselves and wanted to deny it to others.

“I’m not in the business of pulling up the drawbridge behind me and saying to other young people who are ambitious, who want a chance to go to university, that they’re going on to study on poor-quality courses,” Ms Phillipson said.

Asked whether the Government would change the Plan 2 system, over which critics have accused the Treasury of acting like a “loan shark”, she told the BBC’s Sunday With Laura Kuenssberg: “I will look at it, of course I will.”