Streeting calls for 'national debate' on student loan system in wake of graduate fury
The Health Secretary said a serious discussion is needed about the current student loan repayment system.
The "clearly rumbling" debate over the UK's student loans system is “worth having”, Wes Streeting has told LBC after outcry at graduates’ rising debt levels.
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The Health Secretary insisted that a serious discussion about the current repayment system is needed, but added that it is “fair” to ask graduates to make a contribution as “all variables come with a cost”.
However, he admitted it is “tough for younger graduates" to pay back their loans, which continue to rise given high rates of interest.
LBC caller Elliot, a dementia nurse from Bournemouth, said he has racked up £105,000 of student debt and needs to earn £90,000 a year just to break even on the current interest rates.
“Are student loans fair and reasonable for healthcare?”, he asked Mr Streeting during LBC’s Call the Cabinet.
The Health Secretary replied: “I think it's fair to ask graduates to make a contribution... when everyone's fees were funded and there were maintenance grants, a privileged group of people could go to university.”
Read more: Rachel Reeves insists student loans are 'fair' - but LBC callers disagree
He added that of all the repayment schemes in the past, "none have got it right”.
Mr Streeting pointed out that under Labour in 1997, graduation repayments of £3000 were introduced before the Conservative-Liberal Democrat coalition tripled fees to £9000 in 2010.
The minister added that while all debts are written off after 30 years, he appreciates that this is not an "inspiring message” and it is “very demoralising” for graduates to see spiralling balances.
He said: “There's a debate for us to have as a country on what our priorities are... all the variables come with cost.
“The Chancellor thinks I could do something on student finance, but it's going to cost me X amount, which will be billions, or I could fund the NHS or special needs children.
"It is a debate clearly rumbling and worth having. For younger graduates, it feels quite tough at the moment.”
It comes after Rachel Reeves told LBC she believes the student loan system is "fair", despite outcry from graduates over rising debts.
The Chancellor told Natasha Clark: "Well, it is important that you don't have to start paying back the student loan until you earn enough money.
"And that is the point of the student loan system: that you get the loan, you get that great university education and you only pay it back if you can afford to do so.
"And obviously, after a period of time, that gets written off entirely.
"So if you are able to get a job that pays a good wage, you'll pay that money back quicker.
"But if you're never able to repay, that loan will eventually be written off. I think that is a fair system."
It comes as a recent poll revealed that more than 40 per cent of Brits support the Government writing off at least some student debt.
This rises to more than half (55 per cent) of 691 graduates surveyed by YouGov.
In the Autumn Budget, the Government announced the income threshold at which graduates with Plan 2 student loans start repaying their loans would be frozen between 2027 and 2030.
Those who took the loans to attend university between September 2012 and summer 2023 are on Plan 2 student loans.
The threshold will rise to £29,385 in 2026/27 and will remain at that level until 2030, essentially meaning more graduates will start making repayments earlier than they would have if the threshold rose every year in line with inflation.
Alex Stanley, vice president of higher education at the National Union of Students (NUS), said: “The student loan system isn’t working for anyone. Not for students who are having to access foodbanks. Not for graduates who are paying back hundreds of pounds a month without touching the sides of the interest on their loans. And not for the Government as student debt is ballooning.
“Surely the Chancellor should be looking for a solution rather than doubling down on a broken system?”
Interest is charged on Plan 2 loans at the rate of Retail Prices Index (RPI) inflation and up to three per cent on top, depending on how much a graduate earns.
More than three in four (76 per cent) respondents to the YouGov poll said interest rates of RPI plus three per cent are “too high”, with more than half (56 per cent) saying the same for inflation plus 1 per cent.