David Chadwick MP joins cross-party call for urgent reform of student loan system
Welsh Liberal Democrat MP for Brecon, Radnor and Cwm Tawe David Chadwick has joined more than 120 MPs and peers from across the political spectrum in calling on the Government to urgently reform the student loan system.
The MP for Brecon, Radnor and Cwm Tawe has signed a cross-party letter to the Chancellor calling for a review of the current student loan repayment system amid growing concerns over the financial burden being placed on graduates.
The letter has also been backed by Liberal Democrat Education Spokesperson Munira Wilson MP and follows a major report from the House of Commons Treasury Committee which concluded that the current student loan system is "unfair and broken".
The Committee has called on the UK Government to reverse its decision to freeze the repayment threshold for Plan 2 student loans, arguing that graduates should be able to expect the terms on which their loans were originally presented to be honoured without the Government changing them after they have accepted the terms.
Whilst Welsh students are currently unaffected by the freeze in the threshold, they are being hit by large repayment rates and annual increases to their student loan debt that run far beyond the inflation rate.
Under Plan 2, graduates repay 9% of their earnings above the repayment threshold. Freezing that threshold means repayments will take up a greater share of graduates' incomes as wages increase.
David Chadwick also previously met the student loans reform campaign group ‘Rethink Repayment’ to discuss how to reform the system, including lowering repayment rates and limiting interest to significantly lower rates.
David Chadwick has warned the current set-up is stifling many young people economically, meaning they cannot afford to buy a home, start a family or spend money in the wider economy.
Commenting, Welsh Liberal Democrat MP for Brecon, Radnor and Cwm Tawe David Chadwick said:
"Young people were encouraged to go to university with the promise that doing so would open up opportunities and allow them to build successful careers. Instead, far too many graduates now find themselves facing enormous debts under a system where the rules can be changed after they have already signed up.
“Whilst we need to ensure an equal focus is placed on vocational and technical training as on university, we also need to ensure that those who do choose to pursue higher education are not saddled with an unfair and ever-growing financial burden.
"At a time when young people are already struggling with the cost of housing and the wider cost of living, we should not be making it harder for them to get on in life. It's not only a drag on the ambition of our young people, but also on the economy.
"The Government should listen to the growing cross-party concern, reverse the freeze on Plan 2 repayment thresholds and undertake a proper review of the student finance system so that it is fairer, more transparent and sustainable for future generations."
ENDS
NOTES FOR EDITORS:
· The Treasury Committee's report found that most students never repay their loans in full and raised concerns about the way in which the terms of Plan 2 loans have subsequently been changed after they have been taken out.
· The Committee said the Government has a "moral obligation" to reverse the latest freeze and honour the terms under which the loans were originally presented to students.
· In Wales, tuition fees were raised in 2007 by Welsh Labour and again in 2012 by Welsh Labour. The annual increases from 2024 onwards were also made by Welsh Labour.
· The cross-party letter calls for an urgent review of the system to ensure student finance is fair, sustainable and does not act as a barrier to aspiration or higher education.
· In Wales, the Welsh Government has, so far, not frozen the repayment threshold. But Welsh graduates are still being hit by extremely high repayment rates and significantly above-inflation increases to their student loan debt.
· No Welsh Labour MPs signed the letter.