Politics Home | The student loan system isn’t a loan anymore

4 min read23 April

It is a retrospectively rewritten graduate tax that punishes aspiration, entrenches inequality, and falls hardest on women at every stage of their working lives.

An entire generation was told repayments would feel like “a phone contract” or “a few coffees a week.” That was a lie. Only a third of Plan 2 borrowers will ever clear the balance.

The rest pay 9 per cent of every pound above a frozen threshold for up to 40 years – a 51 per cent marginal rate when combined with income tax and National Insurance. A graduate on £50,000 will only keep 49p of each additional pound – how dare politicians continue to call it a loan.

Beneath these headline injustices sits a deeper one policymakers refuse to name: this system is gendered from the day it is signed to the day a woman retires.

Women make up 57 per cent of UK students. They leave with the same debts as men but a labour market that pays them 14 – 15 per cent less and expects them to take career breaks for caring but doesn’t give financial relief.  In the student loan system they pay for longer, pay more in real terms, and rarely clear their balance.

Our research found Ms JD puts the arithmetic in words ministers should read: “Unless you are being paid over £66k annually, you do not even start to break even. To earn £66k as a female in a male-dominated industry will be almost impossible.” Seven and a half years of consistent repayment have taken her balance from £57,000 to £83,000. She finds it “near impossible to buy a house on my own.”

Then there is motherhood – if a woman can afford it. Interest does not pause for maternity leave.

Ms HS, 32 and child-free despite wanting to be a parent, says: “Knowing my student loan balance would still be growing during maternity leave adds an extra layer of financial pressure.” Ms HG and her husband pay £420 a month and have put off starting a family: “This is why the birth rate is so low, we can’t afford to do so.” Westminster wonders about falling birth rates. It has engineered one of them.

The unfairness begins before a woman has even taken out her own loan. Ms CM describes how the parental assessment for maintenance loans assumes a stepparent will fund an adult stepchild’s university costs – penalising single mothers who re-partner. Most single-parent households are headed by women. That is not a footnote. It is structural.

Then there is the pension pipeline. The part that should stop ministers in their tracks. Every pound deducted in a woman’s 20s, 30s and 40s is a pound not compounding in her pension. Women retire with 40 per cent less pension wealth than men. As Ms HS puts it: “Ultimately, it’s a 9 per cent additional tax for life.” The state that raids her payslip now will rescue her later. That is not social policy. It is a doom loop.

Layered on top is a retrospective rewriting of the deal. The repayment threshold was promised to rise with earnings; it has been frozen and re-frozen. Interest rate bands were tightened at the 2025 Budget without mention in the Treasury’s own Budget documents. The 6 per cent cap from September 2026 does not enable graduates to clear their debts, it merely slows the rate at which those debts become unrepayable. In any regulated consumer credit market, marketing debt on terms this misleading would be a clear breach of consumer protection law and bee deemed a scandal.

What I have described is, on its face, indirect sex discrimination under the Equality Act 2010. No gender impact assessment has been published for the threshold freeze or the hidden tightening of the interest bands, raising a serious question about whether ministers have discharged the Public Sector Equality Duty at all.

Fairness is not free; nor is unfairness. Proper reform, retrospective justice, a lifetime repayment cap, and a mandatory gender impact assessment on every future change – costs roughly 0.3–0.4 per cent of GDP. Reforming the triple lock releases savings that would address this intergenerational unfairness.  A political choice, not about affordability.

The student loan system promised social mobility and has delivered a debt trap.

This government has committed to closing the gender pay gap, the gender pension gap and reversing birth rate decline, so cannot credibly defend a policy that measurably widens all three. Ms HG asks the question ministers must answer: “When did hard work mean only surviving?”

Gina Miller is founder of MoneyShe, and co-founder of SCM Direct. You can read her TSC submission here and policy white paper here.