Chancellor defends student loan freeze after ITV confrontation

Chancellor John Healey stated on Thursday that he could not reverse the student loan repayment threshold changes in the latest Budget because the government was prioritizing help for households facing high winter energy bills. He made the comments during an ITV appearance where personal finance expert Martin Lewis challenged him on the policy.

The current rules, implemented in the Autumn 2025 Budget by former Chancellor Rachel Reeves, raised the Plan 2 repayment threshold to £29,385 starting in April 2026. The threshold will remain frozen at that level for three years beginning in April 2027. Lewis, who has campaigned against the changes, asked Healey why the freeze had not been scrapped.

Lewis argued that roughly 5 million people signed up for loans with the expectation that thresholds would rise annually with average earnings. He called the government’s unilateral change of contract terms "a disgrace" and "morally reprehensible." He noted that keeping the freeze in place creates a knock-on effect over the 30-year repayment period, potentially costing low to middle earners thousands of pounds.

Healey acknowledged the pressure on young people trying to make ends meet. He explained that the government is currently dealing with financial pressures driven by the Middle Eastern conflict and trade tensions, as noted by the Office for Budget Responsibility. He said he had to concentrate the Budget on immediate household needs, specifically reducing energy costs and business pressures.

When Lewis pressed him on whether he understood the long-term cost implications, Healey replied, "You said, ‘Do I understand that?’ Yes." Lewis responded that people would make their own judgments on the Chancellor's decision. Healey did not promise a change in future budgets, leaving the issue open for further review.

The debate follows a July 2026 report from the UK Parliament’s Treasury Committee titled "Student loans: broken and unfair?" The committee concluded that the Treasury has a moral obligation to reverse the freeze. It found that the Department for Education and the Student Loans Company mis-sold loan terms by not clearly stating that conditions could be changed retrospectively. The inquiry received more than 52,000 public responses.

Dame Meg Hillier, chair of the Treasury Committee, urged the Chancellor to use the upcoming Budget to give graduates breathing space. She noted that while the government said the entire student finance system is under review, it has not ruled out reversing the threshold freeze. Hillier emphasized the need to update information for prospective students while addressing the punitive repayment terms facing current graduates.