Jessica Lindsay
Published February 4, 2026 4:39pm
Updated February 4, 2026 4:39pm
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Martin has called the changes ‘unfair to all’ (Picture: Shutterstock/Getty Images)
If you’re one of the estimated 5.8 million graduates with a Plan 2 student loan, the amount you pay each month could soon increase.
As Martin Lewis explained in a recent blog post, ‘change is afoot’ for those who started university between 2012 and 2023 — and unfortunately, ‘not in a good way’.
The Money Saving Expert (MSE) founder is specifically referring to a set of changes due to come into effect over the next year.
In her November Budget, Chancellor Rachel Reeves announced plans to increase the repayment threshold on these loans before freezing it for a period of three years.
At present, graduates on Plan 2 pay 9% of anything they earn above £28,470, but this will be raised to £29,385 in April and stay at the same level until 2030.
This effectively means people on the cusp could be pushed over the threshold if their wages increase at (or quicker than) the rate of inflation, while those who were already above it will pay more as a percentage of their earnings.
Which student loan repayment plan am I on?
These are the broad guidelines of each plan, but you can double check which one you’re on via your online student finance account.
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Plan 1
- If you’re from England or Wales and started your undergraduate course before September 1, 2012.
- If you’re from Northern Ireland and started university between 1998 and now.
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Plan 2
- If you’re from England and started your undergraduate or PGCE course between September 1, 2012 and July 31, 2023.
- If you’re from Wales and started your undergraduate or PGCE course on or after September 1, 2012.
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Plan 4
- If you’re from Scotland and started university between 1998 and now.
-
Plan 5
- If you’re from England and started your undergraduate or PGCE course on or after August 1, 2023.
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Postgraduate loan
- If you’re from England or Wales and did a master’s, postgraduate or doctoral degree.
‘Assuming prices and average earnings rise, the threshold won’t, so a bigger proportion of Plan 2 income will go towards repaying the student loan,’ explains Martin, describing it as a form of ‘fiscal drag’.
According to the consumer finance guru, the move is ‘unfair to all’, but ‘those who earn from just above the threshold up to mid-level graduate salaries’ will be hardest hit, as they continue paying until the 30-year mark, when it’s written off, yet are unable to settle the debt entirely like many higher earners could.
Due to the interest charged on these loans — now linked to the RPI rate of inflation with an additional amount based on income —some people actually see their total increase despite decades of chipping away at it.
Many graduates will never pay off the total amount borrowed (Picture: Getty Images)
With an outstanding debt estimated at £213 billion by the Institute for Fiscal Studies (IFS), most Plan 2 borrowers will never repay the full amount owed. However, this latest freeze will take the expected lifetime loan repayment for a 2022-23 graduate from £52,600 to £55,800.
In a message to the Chancellor on BBC’s Newsnight, Martin said: ‘I do not think it is a moral thing for you to do to be freezing the repayment threshold in this way… You didn’t say the terms were variable. This isn’t right. Please have a rethink.’
He urged those affected to write to their MPs to protest the Government’s decision, noting that a MSE campaigning helped halt plans for similar freezes back in 2015.
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Should you overpay your student loan?
If this news has you wondering whether you should put more towards your loan in the hopes of paying it off quicker, we’re sorry to say the answer isn’t exactly clear cut.
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Because ‘student loans don’t work like normal loans’, Martin recommends erring on the side of caution — even if you look at ‘look at your Plan 2 Statement, see interest accruing faster than you’re repaying it, and feel anger or fear.’
While it’s important to decide based on your own specific circumstances, he claims overpayment is usually only beneficial if you have a small total debt, are on a career path where incomes accelerate rapidly, are likely to work the full 30-year term without any long breaks, or can put ‘multiple £10,000s’ extra towards clearing it.
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If the opposite is true for you, your overpayments may not have any impact in the long-run. And since you can’t get overpayments back, doing so in haste could mean you’ve ‘flushed that money away without any gain’.
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