Student Loan Threshold Freeze 2026: What It Means for You
TL;DR
The student loan threshold freeze 2026 means Plan 2 graduates will start repaying at £29,385 - and it stays frozen until 2030. According to the Institute for Fiscal Studies, this could cost you an extra £3,200 over your lifetime. Here’s what you need to know and what options you have.
What’s happening with student loan repayments?
If you’ve been following the news, you’ve probably seen Martin Lewis going head-to-head with Chancellor Rachel Reeves over student loan changes. And honestly? This one matters.
In the November 2025 budget, Reeves quietly announced that the salary threshold for Plan 2 student loan repayments would be frozen at £29,385 from April 2026 - all the way until 2030. Normally, this threshold rises each year with earnings. Freezing it means more graduates get pulled into repayments, and those already repaying hand over more.
This affects around 5.8 million people who started university between September 2012 and July 2023. That’s a lot of graduates suddenly paying more than they expected.
Why is Martin Lewis so angry about this?
Martin Lewis, the MoneySavingExpert founder, has called the freeze “not a moral thing” for the government to do. His argument? When you took out your student loan, you were told the threshold would rise with earnings. Freezing it changes the deal.
“You tell companies they can’t do that - you shouldn’t do it either,” Lewis said on BBC Newsnight. “It would not be allowed for any commercial lender.”
He’s urged all 5.8 million affected graduates to write to their MPs, saying “this isn’t on - this isn’t what we were promised.”
The National Union of Students has backed him up, warning that the freeze could leave new graduates struggling to afford food, rent, and bills.
How student loan repayments actually work
Let’s break this down simply. If you’re on a Plan 2 loan (started uni between 2012-2023), you repay 9% of everything you earn above the threshold.
Here’s what that looks like in practice:
| Your Annual Salary | Monthly Repayment | Yearly Repayment |
|---|---|---|
| £29,385 or less | £0 | £0 |
| £35,000 | £42 | £505 |
| £40,000 | £80 | £955 |
| £50,000 | £155 | £1,855 |
| £60,000 | £230 | £2,755 |
The higher you earn, the more you repay. But here’s the kicker - for most graduates, the interest added each month is higher than what they’re paying back. Your debt actually grows even while you’re making payments.
What the freeze really costs you
The Institute for Fiscal Studies has done the maths. If you started a course in 2022-23, the combined effect of threshold freezes means you’ll repay an extra £3,200 over your lifetime.
Your expected total repayments jump from £52,600 to £55,800.
And in the shorter term:
- 2027-28: Average graduate pays an extra £93
- 2029-30: Average graduate pays an extra £259 per year
The IFS put it bluntly: “We now expect the taxpayer will pick up almost none of the bill for financing the higher education of this cohort.”
Plan 2 vs Plan 5: Know which one you’re on
If you’re thinking about starting university now or recently started, you might be on Plan 5 instead. Here’s the difference:
| Feature | Plan 2 (2012-2023 starters) | Plan 5 (2023 onwards) |
|---|---|---|
| Repayment threshold | £29,385 (frozen until 2030) | £25,000 (frozen until 2027) |
| Repayment rate | 9% of income above threshold | 9% of income above threshold |
| Loan write-off | After 30 years | After 40 years |
| Interest rate | Up to RPI + 3% | RPI only |
Plan 5 has a lower threshold - meaning you start repaying sooner - but the interest rate is lower and capped at inflation. It’s a trade-off, but many experts argue Plan 5 graduates will pay more overall because of the longer 40-year term.
What can you actually do about this?
1. Understand your loan Check your student loan balance and which plan you’re on at GOV.UK’s student loan repayment page. Knowledge is power here.
2. Consider voluntary overpayments (sometimes) If you’re a high earner who will likely repay in full before write-off, overpaying can save you interest. But for most graduates who won’t clear their loan in 30 years, overpaying is just giving away money.
3. Write to your MP If you agree with Martin Lewis that this isn’t fair, make your voice heard. You can find your MP at parliament.uk.
4. Plan your finances around it Budget for your student loan repayments like a tax - because that’s essentially what it is. At UniStart, we help students understand these realities before they even apply, so you can make informed decisions about your education.
What the government says
Chancellor Rachel Reeves has defended the freeze, arguing it’s “not right that people who don’t go to university are having to bear all the cost for others to do so.”
She told LBC: “It is important that you don’t have to start paying back the student loan until you earn enough money… If you’re never able to repay, that loan will eventually be written off. I think that is a fair system.”
The Department for Education added that the government is “making fair choices to make sure the student finance system is sustainable - protecting taxpayers and students.”
Should this stop you from going to university?
Here’s my honest take: no.
Yes, the student loan system has its problems. Yes, this freeze makes things worse for graduates. But the value of higher education isn’t just financial.
The reality is:
- You only repay when earning above the threshold
- Most people never repay in full anyway
- The debt is wiped after 30 years (40 for Plan 5)
- It doesn’t affect your credit score
- Employers don’t see it
If you’re an EU citizen with settled or pre-settled status living in the UK, you’re entitled to the same student funding as UK citizens - up to £9,535 for tuition and up to £13,762 for living costs in 2025-26.
The key is going in with your eyes open. Know what you’re signing up for. Make sure your course leads somewhere worthwhile. And don’t let fear of a number on a statement stop you from investing in yourself.
FAQs
Will the student loan threshold freeze affect me if I haven’t started repaying yet? Yes. If you’re on a Plan 2 loan and earn above £29,385 from April 2026, you’ll start repaying. The freeze means this threshold won’t rise with inflation until 2030, so more graduates will be pulled into repayments each year.
How much extra will I pay because of the threshold freeze? According to the IFS, the average 2022-23 starter will pay around £3,200 more over their lifetime - bringing total expected repayments from £52,600 to £55,800 in today’s money.
Can I do anything to reduce my student loan repayments? Your repayments are calculated as 9% of income above the threshold - you can’t reduce this. However, if you’re self-employed or have variable income, ensure HMRC has accurate earnings information to avoid over-repayment.
Does the threshold freeze apply to Plan 5 loans too? Plan 5 has its own threshold of £25,000, which is frozen until April 2027. After that, it’s set to rise with inflation. Plan 5 students repay for 40 years instead of 30.
Should I pay off my student loan early? For most graduates - no. Unless you’re certain you’ll repay in full before the 30-year write-off (typically high earners), early repayment often means paying more than you would otherwise.
Ready to explore your options?
Understanding student finance is the first step to making smart decisions about your education. If you’re an adult in the UK thinking about university, UniStart can help you navigate the process - from finding the right course to securing your funding.
👉 Download the UniStart app to explore your options, or request a callback to speak with an advisor who can answer your questions.
“Student finance shouldn’t be a barrier to education. Yes, the system is complicated - and yes, changes like this threshold freeze make it harder. But with the right guidance, you can make informed decisions about your future.”—Radu Danila, Founder
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