Student loans: PM poised to act after Badenoch joins backlash.

The Treasury and Department for Education are reported to be discussing reversing the freeze on the repayment salary threshold and lowering Plan 2 interest rates after Tory leader Kemi Badenoch backed changes.

Ministers are reported to be discussing changes to student loan terms. The Treasury and the Department for Education are said to be holding talks about reversing a freeze to the salary threshold for repayments. They are also considering reducing the interest rate charged on Plan 2 loans after Tory leader Kemi Badenoch voiced support for change. The freeze to the repayment threshold was introduced in the November Budget by Rachel Reeves. Current status: - The Treasury and Department for Education are reported to be discussing reversing the three-year freeze of the repayment threshold set at £29,385. - Ministers are said to be considering lowering Plan 2 interest, which is charged at RPI plus up to 3% and has been reported at a maximum of about 6.2%. - Tory leader Kemi Badenoch publicly backed moving to inflation-only interest on Plan 2 loans. - The House of Commons Library reported outstanding student loans at about £267 billion at the end of March 2025. Summary: Reports say a policy change would mark another reversal by Sir Keir Starmer's government on fiscal matters. Undetermined at this time.