‘Education, education, education – not debt, debt, debt’

Education, Education, Education. A defining speech from the last Labour government that we rightly look back on with pride, but it’s also the underpinning of much of what has  defined Labour Governments’ past and present: a relentless focus on unlocking opportunity  and transforming life chances. A belief not only in the transformative power of education  economically and socially, but also that the key to social justice is unlocking opportunity for  everyone – the promise that no matter what your background, you can get a great education  and fulfil your potential. 

Whether it was the 1944 Education Act under Attlee’s Government; New Labour’s policies to support children through the Educational Maintenance Allowance that I was entitled to  during my sixth form studies; or this Government’s reforms in the White Paper on School  Reform – education has always been viewed by Labour as an important mechanism for achieving our vision of a fairer society. 

Now this Labour Government faces a further challenge in ensuring opportunities generally  remain open to all and that education continues to be a means of promoting our values of  social justice, fairness and progressive politics – this challenge is reforming the student loans  system. 

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Between 2012 and 2022, approximately five million students took out loans to pay for their degree and were placed on the Plan 2 repayment scheme. Whilst I won’t attempt to go into a  lengthy explanation here of all the problems associated with student loans, for me the main takeaway fact is this: as a result of a perverse intersection of past political choices – including the high interest rates of the Student Loans Company, the unilateral adjusting of terms by successive governments, and the tapering of repayments dependent on income –the normal  features of a private loan contract with individual students are completely lost, and it thus instead serves as a graduate tax. 

Once we accept that, we must then acknowledge that it is regressive in its operation. Firstly, it only applies to the 90 percent of students whose parents could not afford to pay university fees up  front. It also creates a much higher lifetime burden on lower and middle earners than on the  highest earners, who can clear the debt quickly, avoiding the endlessly accumulating interest  burden. 

However we as a party attempt to look at it, a regressive tax like this is at odds with the fundamental core of who we are. Education can be empowering – for me, as the first person  in my family to go to university on a Plan 1 student loan repayment scheme, it changed my life. I didn’t mind contributing towards my education, recognising the value it had to my  future and the need to ensure fairness with the half of students who do not go to university. 

But this system of contribution has changed and instead become a system of lifetime financial  pressure. I’ve heard from countless students (and their families) who are paying more than  £100 a month but seeing their debt accumulate and never reduce. This seems fundamentally unfair to them. Younger generations are facing continued and growing financial burdens that  prevent other opportunities from being widened – whether to start a family, get on the  housing ladder, or afford further study in the future. We must urgently review the system to  break this increasing generational burden. 

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There are many policy proposals that could work, including setting a lifetime cap on the total  amount of interest paid to 20 percent of the original loan size, ending the three-year freeze on the threshold at which students start repaying loans, charging interest using CPI rather than RPI,  and reducing the repayment rate to five percent of income instead of nine percent. Whilst the specific changes rightly need to be carefully considered, and different distributional benefits weighed up, the  case and urgency for some form of action is clear. 

I know how jarring it is to listen to Conservatives who were members of the government that  trebled tuition fees, cut EMA, slashed youth funding and embedded much of the inequality of  this current system appear to be outraged at the consequences of their own actions. But we  must realise that this is not merely about scoring political points – it’s about who we are and what matters to this government. 

Fairness aside, if we fail to look at past failures in student loan repayment plans, we’re in for a political reckoning in the future. The combined effect of increasing the minimum wage and  freezing the repayment threshold for student loans means that the repayment rate of nine percent of total salary is having an increasingly large effect on the income of young professionals. By the next election, there will be ten million people with student debt. The burden of that  additional tax, for 30–40 years, increasingly makes it harder to start a family, save for a mortgage, or put money aside for a pension; and the aggressive terms of the loan creates a  substantial sense of unfairness and political disillusionment. 

We need to be the government that champions education as a force for good and restores the  generational social contract that once existed – that each generation will see more  opportunity, not less, through hard work and contribution. Now is the time once again to say education, education, education – not debt, debt, debt for our younger generation.

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