The distortions of the student loans system have snowballed from a much-ignored gripe of young graduates to a headline political issue, and the public is starting to take notice.
A set of terms dreamt up during the first year of the coalition government and implemented for English and Welsh students starting university after September 2012 are for the first time being examined with the scrutiny they deserve. Everything from the exorbitant interest rate that makes such loans almost impossible to pay off, to the thresholds at which repayments start and the impact this is having on graduate life prospects, has come under the microscope.
New polling shared exclusively with the New Statesman by Ipsos reveals that the increase in attention is causing the English public to change their minds about the thorny issue of the interest charged on loans to pay for university degrees.
Nearly a quarter (23 per cent) think the fees should be lowered, while the same proportion favour abolishing fees altogether and making university free and paid for out of general taxation. A further 18 per cent support replacing the loan system with a graduate tax. Taken together, this suggests that two thirds of the British public want the current system to change.
The most fascinating findings relate to the interest rate. A majority – 54 per cent – do not believe student loans should be charged any interest at all – that’s up 13 percentage points since Ipsos polled the question in May 2023. A further 15 per cent think an interest rate lower than inflation should be charged, while another 15 per cent think the interest should be the rate of inflation (essentially the reality for post-2023 students). Just 2 per cent think it’s fair to charge an interest rate higher than inflation.
This is significant. For while it was the tripling of tuition fees that got the most attention in 2010 when the reforms were being debated, it is the harsh realities of the interest rate that are causing the most consternation now. At the time of introduction, an interest rate of RPI plus three for higher earning graduates was justified on the basis that this was needed to subsidise low earners who might never earn enough to start repaying their loans. It led to some truly distortive discrepancies. As I wrote in January: “In 2017, for example, the interest rate on student loans hit 6.1 per cent – more than 24 times the Bank of England base rate at the time of 0.25 per cent.” The situation during the era of the 0.1 per cent Covid base rate was even more dire. While lucky homeowners were snapping up rock-bottom mortgage deals, graduate debt was ballooning.
It is the interest rate that makes this debt so difficult for graduates to pay off. One of the reasons this issue has suddenly hit the public’s awareness is the dawning realisation for graduates who have dutifully been making repayments for a decade that their debt is bigger than when they first left university. The average loan amount requires a graduate to be earning a salary of at least £66,000 before they start repaying the capital rather than just the interest.
Back to Ipsos: 76 per cent of the British public (across all ages, not just younger generations) worry that students leave university with too much debt, and 73 per cent are concerned the cost is putting off people from poorer backgrounds. This matters, because one of the justifications of the post-2012 reforms was that they also widened access (the cap on university places was removed). Since then, proponents have pointed to the rise in students, especially from low-income backgrounds, embarking upon degrees as evidence the system is working as it should. But that rise obscures the fact that the terms of these loans might not have been understood by the teenagers who signed up to them, under pressure from parents, teachers, and indeed government ministers telling them the debt was nothing to worry about.
Interestingly, despite widespread disapproval with interest being charged above the rate of inflation, the Ipsos polling suggests that only 23 per cent of people realise that this is what currently happens. The student finance system is widely misunderstood (as I found over the years trying to draw attention to the looming crisis), but as the consequences become more apparent, public sympathy with affected graduates is growing.
The final and most fascinating bit of polling concerns those consequences. Asked whether they were concerned that the cost of student loan repayments was preventing graduates from being able to achieve key life milestones, 68 per cent said yes, with strong consensus in all age brackets. Unsurprisingly, that rises to 81 per cent among those currently repaying a student loan (they’d know, after all).
What does all this mean for the future? Rachel Reeves froze repayment thresholds in the Budget (which is essentially a double-stealth tax, at odds with the terms young people signed up to) and insisted last month that the system was “fair and reasonable” (an assessment I covered here). But pressure has been building. As my colleague Megan Kenyon recently reported, the student loans issue has been consuming Labour MPs, some of whom are themselves trapped on the 2012 system. There are rumours that the government is finally waking up to the need to act, with ministers considering ways to tweak the system to try to make it fairer.
We’ll continue to cover the situation as it develops. For now, if you’re an affected graduate, take solace in the Ipsos polling: people of all ages are finally beginning to understand just how destructive the system is, and are increasingly on your side.
Fieldwork for the polling was conducted by Ipsos between 13-17 February 2026.
[Further reading: Britain’s youth are living in Nick Clegg’s shadow]
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