Story perspectives

UK Inquiry Calls for RPI-Plus Loan Reform

5/28/2026

Summary

Hillier Reviews Loans

A UK inquiry found the loan punitive, with 93% saying they could not attend without a loan and 82% finding repayments more burdensome than expected.
Plan 2 loans charge RPI-plus interest, set a £29,385 threshold, require nine per cent repayment above it and six per cent on postgraduate loans.
Chair Dame Meg Hillier set a hearing for 2 June and said the committee consider cutting RPI-plus interest, raising thresholds and improving disclosure.

Summary

Government Reintroduces Grants

Government reintroduced targeted maintenance grants to ease the burden on lower-earning graduates.
Borrowers say £200-£600 monthly repayments stop them from saving for a mortgage.
Women who pause careers for childcare face faster debt growth from aggressive compounding interest.
Campaigners argue the six-percent cap is inadequate and push for a five-percent rate tied to the Bank of England base rate, a situation analysts compare to Kenya’s Higher Education Loans Board.

History

Historical Context

1998 Prime Minister Tony Blair enacted the Teaching and Higher Education Act, creating £1,000 tuition fees and swapping most maintenance grants for loans. Those Plan 2 loans charge 9 % of income above a £29,385 threshold with interest at the Bank of England base rate + 1 % or RPI, whichever is lower. Meg Hillier’s June 2024 inquiry revives this debate as borrowers demand a 5 % BoE-linked rate, citing Kenya’s model.

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Hillier Reviews Loans

A UK inquiry found the loan punitive, with 93% saying they could not attend without a loan and 82% finding repayments more burdensome than expected.
Plan 2 loans charge RPI-plus interest, set a £29,385 threshold, require nine per cent repayment above it and six per cent on postgraduate loans.
Chair Dame Meg Hillier set a hearing for 2 June and said the committee consider cutting RPI-plus interest, raising thresholds and improving disclosure.

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