Sir Keir Starmer hints at changing student loans system

Sir Keir Starmer has said the government is to look at ways of making the student loans system "fairer".

He made the pledge as he blamed rising loan costs on the Conservatives - after being asked about the issue by Tory leader Kemi Badenoch at Prime Minister's Questions (PMQs) on Wednesday.

Speaking to reporters, Sir Keir's spokesman also suggested that ministers may consider reforms such as slashing interest rates and changing the repayment threshold.

Earlier this week, Ms Badenoch promised to cut the interest paid on some student loans if elected, amid growing concern about the impact on graduates' finances.

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It comes after Chancellor Rachel Reeves announced in November's budget that the salary threshold at which students have to start repaying the loans would be frozen at £29,385 for three years, leaving many having to pay more.

Interest on Plan 2 student loans - lent to students in England who started their courses between 2012 and 2022 - is charged at a rate of the Retail Price Index (RPI) of inflation plus up to 3%, depending on how much a graduate earns.

But Ms Badenoch said the Conservatives would restrict this to RPI only, as she said this would help more graduates pay off their debt.

At PMQs, she pressed Sir Keir on the issue, asking if he would cut interest rates on student loans.

He replied: "I have to say, I was glad to learn that the leader of the Opposition has finally admitted that they [the Conservatives] scammed the country on this, and that applies to everything they did in government.

"We inherited their broken student loans system. We've already introduced maintenance grants to improve the situation, which they scrapped, and we will look at ways to make it fairer, and we will do other things within the economy to help students."

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When Ms Badenoch asked if graduates were paying more or less under Labour, the prime minister did not directly answer.

He said under the previous government, "inflation was at 11%, which crippled the state of finances for students as their loan rates went up".

Ms Badenoch said: "The fact is, graduates are paying more, not less," as she accused Sir Keir of "taking from students to give to Benefit Street".

Sir Keir replied: "What a nerve. Under their government, student loan thresholds were frozen for 10 years.

"They broke the system, they did it with a bloke over there when they were in coalition together, and we're fixing it."

Sir Keir's spokesman would not confirm if student loans would be included in the chancellor's spring statement next month and refused to provide any more details.

But he said the government was keeping "under review the ways in which we can make life better for graduates".

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