The UK government has said it will overhaul the guidance given to new student loan borrowers to make clear that repayment terms and conditions can change after they take out a loan. The move follows a Treasury committee report in July that accused the government of mis-selling loans, citing promotional materials, including slideshows comparing repayments to mobile phone contracts and YouTube videos, that failed to disclose that conditions could later be altered. The row was triggered by former chancellor Rachel Reeves's decision last November to freeze the plan 2 repayment threshold in England at £29,385 for three years from April 2027, disappointing students who believed thresholds would rise with inflation.

In its response, published on Sunday, the government acknowledged graduates' difficulties but stopped short of reversing the freeze, saying it must retain flexibility to adapt the system to economic conditions and protect taxpayer contributions; it also rejected calls to make loans contractual so terms could not be changed later. The current plan 2 threshold is £28,470. In August, 121 cross-party MPs and peers wrote to new chancellor John Healey warning that frozen thresholds combined with inflation-linked interest meant graduates faced "historically high" marginal tax rates, with many keeping less than half of any pay rise. Treasury committee chair Meg Hillier welcomed the clearer guidance as an important step but said it would not help graduates already facing "punitive" terms, and urged Healey to revisit the threshold freeze in his upcoming budget.