David Reed MP has welcomed comments from the Secretary of State for Education recognising the unfairness of the current student loan system, after she described it as "egregious" and said reform was at the top of her in-tray.
Mr Reed has been campaigning for changes to the student finance system for some time, arguing that it has become deeply unfair to graduates. He says students were encouraged into higher education without a full understanding of the long-term cost of their loans, which now operate in practice as an additional 9% charge on earnings above the repayment threshold, a threshold that has remained frozen despite inflation.
Earlier this year, Mr Reed challenged the Chancellor in the House of Commons following the Spring Statement, calling for a cross-party consensus to reform the system. He has also been working with Rethink Repayment, a grassroots campaign calling for a fairer approach to student finance.
Momentum for the much needed change has continued to grow in recent months. In July, the cross-party Treasury Select Committee published a highly critical report into the student loan system, concluding that it is broken and in urgent need of reform. The Committee found that many students had effectively been mis-sold their loans and criticised the lack of transparency surrounding the system.
David Reed MP said:
"The current system is deeply unfair. At a time when many graduates are already facing a high cost of living, a difficult jobs market and heavy tax burdens, adding what is, for all practical purposes, another 9% charge on their earnings is simply wrong.
"It makes it harder to save for a home, build a pension, start a family and build financial security in the way previous generations were able to.
"I am very pleased that the new Education Secretary appears to recognise the scale of the problem. That is an important first step. But recognition must now be followed by action. We need a student finance system that is transparent, sustainable and fair, and I will continue working with colleagues from across Parliament until that becomes a reality."