Student loans system now ‘deeply unfair’, Nick Clegg says

Former Liberal Democrat leader Sir Nick Clegg has said the student loans system is now “deeply unfair”.

Sir Nick, who was the deputy prime minister when tuition fees were increased to £9,000, told the BBC the current fee system is a “mess”.

It comes amid rising criticism of the system, particularly for plan 2 loans, which had the repayment threshold frozen for three years at the autumn budget.

The Liberal Democrats had pledged before the 2010 election to oppose any rise in tuition fees.

Under the coalition government with the Conservatives, the tuition fee cap was instead increased to £9,000.

Sir Nick told the BBC he would take any criticism of his role in increasing higher tuition fees “on the chin”.

At the autumn budget, Chancellor Rachel Reeves announced the repayment threshold for plan 2 loans would be frozen at £29,385 for three years from April 2026, meaning more graduates will start making repayments earlier than they would have if the threshold increased with inflation.

The repayment threshold for plan 2 loans has been subject to freezes before – notably it remained at £27,295 between April 2021 and 2025.

Sir Nick told the BBC he was not responsible for changes made to fees and loans after the introduction of higher fees such as the freezing of the repayment thresholds, and said this has played a part in a system that is now “deeply unfair”.

Plan 2 loans were issued to English students who started their undergraduate courses between 2012/13 and 2022/23.

Interest on plan 2 loans is charged at the rate of RPI inflation plus up to 3%, depending on how much a graduate earns.

Prime Minister Sir Keir Starmer has pledged to look at ways to make the student loans system fairer.

Ministers could be looking at changes to the threshold and interest rates, his spokesman suggested last month.

Conservative leader Kemi Badenoch has promised her party would restrict the interest on plan 2 loans to RPI inflation only.

Sir Keir previously said the current Government inherited the Conservatives’ “broken student loans system” and has already reintroduced maintenance grants to make things fairer for students.

The National Union of Students (NUS) is calling for the Government to increase the plan 2 repayment threshold and will speak with MPs on Wednesday to discuss student loan reform.

NUS president Amira Campbell said: “The strength of feeling in the failures of the student loan system cannot be denied, student leaders from across the country are travelling down to Westminster today to speak with their MPs about this broken system.”

Labour MPs have also called for ministers to make changes to the system.

A Government spokesperson has previously said: “Threshold freezes have been introduced to protect taxpayers and students now, alongside future generations of learners and workers.

“The student finance system protects lower-earning graduates, with repayments determined by incomes and outstanding loans, and interest being cancelled at the end of repayment terms.”