Labour's Lucy Powell admits student loan repayments are 'unfair' - but blames Donald Trump for scuppering Government's efforts to deal with graduates' snowballing debt

Published: 08:16 EDT, 4 November 2026 | Updated: 08:18 EDT, 4 November 2026 Labour's Lucy Powell today admitted onerous student loan repayments faced by graduates are 'unfair' - but blamed Donald Trump for the Government's failure to act.The Education Secretary told MPs that student loans are placing a 'real burden on young people' as she was challenged over her previous pledge to look at the issue.'I completely understand their concerns,' she said of those who are now repaying Plan 2 loans, which have left some graduates with snowballing debts.But she acknowledged the 'challenging' state of the public finances in the wake of the US war with Iran had limited the Government's ability to act at last week's Budget.Interest on Plan 2 loans, taken out between 2012 and 2023 in England, is charged at the rate of RPI inflation, plus up to 3 per cent extra depending on income.Repayments start when graduates earn a salary of at least £29,385 - a threshold that was frozen for three years by former chancellor Rachel Reeves.It means graduates are set to be worse off as the threshold would have otherwise risen with inflation.Before this year's Budget, Chancellor John Healey was urged to reverse the three-year threshold freeze - but he did not take any action. Labour's Lucy Powell today admitted onerous student loan repayments faced by graduates are 'unfair' - but blamed Donald Trump for the Government's failure to actThe Tories have pledged to limit the interest charged on student loans to RPI only, amid the eye-watering amounts being added to some graduates' loans despite years of repayments.Since being appointed Education Secretary in July, following Andy Burnham's ousting of Keir Starmer as Prime Minister, Ms Powell has stood by past comments in which she described the interest rates on Plan 2 loans as 'egregious'.She also promised the issue was at 'the top of my in-tray' when she took over at the Department for Education this summer. Ms Powell was pressed on whether it was still a priority for her - following the lack of action at the Budget - as she appeared in front of the House of Commons' Education Committee on Wednesday.She said: 'I think we can all agree that there are some real aspects of the student loan repayment scheme that are unfair and putting a real burden on young people.'Plan 2 in particular. We've got over five million young people now on Plan 2, most of whom are repaying that back.'I completely understand their concerns, their real issues with the terms of that - having been changed many times over the lifetime of the Plan 2 that's been in place.'I've heard the Prime Minister and the Chancellor both say they also feel that pain too and they understand the concerns of graduates on Plan 2 and other schemes.'I think we can hold that view at the same time as recognising the public finances are difficult and we have to make decisions about priorities.'The Chancellor laid out his priorities and the priorities of the Government at the Budget.'Asked if dealing with student loan repayments was still top of her in-tray, the Education Secretary added: 'It's something I care strongly about, but there is a cost associated with making those changes.'We all are well aware, aren't we, of how challenging - particularly since the war in Iran, the extra impact that has put on the public finances, on Government debt spending.'The student loan scheme particularly relates to Government debt because... the student loan book sits on the Government's debt register.'Even any small changes to interest rates or thresholds can affect the value of the student loan book and the debt and how that affects Government borrowing.'These are the pressures that we're facing and it's a difficult time for public finances as a whole.'