The discourse surrounding the UK Government’s Plan 2 Student Loan repayment scheme has been reignited by recent graduates’ anger at this high interest plan. Announced on the 19th of August 2025 by the Department of Education, Plan 2 will impact both current and former university students who started an undergraduate course from September 2012. In April 2026 however, the UK Government decided to change the terms of this plan by increasing the repayment threshold and further indebting young graduates. With this plan impacting both English and Welsh university students differently, how will the future of Welsh graduates be affected?
The Plan 2 Student Loan scheme is designed for UK students who attended university between the 1st of September 2012 and the 31st of July 2023 for England. In Wales, this plan will remain for students who attended university from the 1st of September 2012 onwards, applying to not only former and recent graduates, but future Welsh university students.
So how does this repayment plan work? Plan 2 raises the repayment threshold to £29,385 per year with the write-off period being increased to 30 years. Currently, the English Government have frozen this repayment threshold for three years from April 2027, which is likely to result in English graduates repaying more money as the threshold will not rise with their earnings. The repayment rate for Plan 2 is 9% of income above the threshold, yet has been capped at 6% from September 2026 due to concerns with inflation. The Minister for Further and Higher Education in Wales, Vikki Howells, states the intent for this cap to ‘offer protection for student loan borrowers across Wales’ for the upcoming academic year.
UK postgraduate students are angry at the increased interest rate on this plan, making it harder for them to reduce their debt. Former graduates with secured jobs are now earning less money due to this repayment scheme. Current graduates are struggling to get jobs whilst needing a high salary to offset the interest on Plan 2 alone, making this a regressive system deeply impacting graduates of the last 15 years.
Financial Journalist and founder of Money Saving Expert, Martin Lewis, has criticised the Plan 2 Student Loan scheme for its counterproductivity. On the social media platform X, Lewis deemed this plan a ‘breach of natural justice’, commenting on its impact on former and future students. Chancellor Rachel Reeves, has defended Plan 2 to the BBC as ‘fair and reasonable’ despite the criticism against the UK Government’s decision to freeze the repayment threshold. The Chancellor justified Plan 2 in how it will bring different repayment plans in line with each other, so that former students pay back their student loans at the same income level. Lewis, during his speech for the 2026 BAFTA Television Special Award, called Chancellor Reeves to action, asking her to reverse the ‘morally wrong’ Plan 2 scheme.
Despite the anger and criticism the UK Government has faced following the change in terms for Plan 2 Student Loans, the Welsh Government will be sticking to this plan compared to England switching to Plan 5 Student Loans for graduates after 2023. Plan 2 benefits Welsh students more due to factors such as the non-repayable Welsh Maintenance Grant of up to £8,100 replacing part of the student loan and Welsh students exclusively having the opportunity for a partial loan cancellation scheme. Alongside the consistency of Plan 2 being set to continue in Wales, these factors significantly reduce the lifetime of debt compared to England.
The Plan 2 Student Loan repayment plan will impact Welsh students for years to come. Capping interest rates and increasing repayment thresholds may be steps in the right direction towards a fairer repayment scheme, but overall Plan 2 increases student debt across the UK and doesn’t benefit graduates navigating postgraduate life.
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