More than half of Britain’s graduates say they would avoid taking out a student loan if they had the choice again, according to a major parliamentary inquiry that has exposed deep dissatisfaction with the UK’s higher education funding system.
The Treasury select committee launched its investigation into student loans earlier this year amid growing concerns that rising interest rates and increasing debt burdens are placing long-term pressure on young workers. Its call for evidence received more than 52,000 responses in just one month, making it one of the largest public engagements ever recorded by the committee.
Among the 49,000 respondents who had taken out student loans, 57% said they did not fully understand the terms and conditions when they signed up. A further 51% said they would choose not to take a loan again. Despite this, 91% acknowledged they would not have been able to attend university without financial support.
The findings highlight a growing tension at the heart of the UK’s higher education model, where access depends heavily on borrowing while repayment conditions are widely misunderstood.
Respondents also reported that loan repayments are influencing major life decisions, including delaying home ownership, postponing family plans and turning down promotions that would increase earnings but also raise repayment contributions.
These findings align with separate analysis from Sir Alan Milburn, the government’s former social mobility adviser, who noted that around one in ten young people classified as not in education, employment or training now hold a university degree. He warned that employers continue to struggle to find skilled workers despite rising graduate numbers.
The average graduate debt now stands at approximately £53,000. Repayments begin at 9% of income above thresholds that vary between £25,000 and £33,795 depending on the loan plan. Additional postgraduate borrowing can add further deductions.
Criticism is strongest for Plan 2 loans issued between 2012 and 2023. Interest rates linked to inflation plus additional percentages mean many graduates see their debt increase even while making regular repayments. According to the inquiry, 93% of respondents said the repayment terms and interest structure were unreasonable.
For higher earners, combined tax and loan repayments can result in marginal rates of up to 57%, raising concerns that graduates may be discouraged from staying in the UK or progressing into higher-paid roles.
The committee also warned that the system risks widening inequality, as wealthier students are more likely to avoid loans entirely, while others accumulate long-term debt that restricts financial independence.
Dame Meg Hillier, chair of the committee, said the findings show many young people feel “overburdened and demoralised” by student debt, adding that the issue is increasingly affecting career choices and economic confidence.
The inquiry is expected to publish its final recommendations later this year, with potential reforms including changes to interest rates, repayment thresholds and clearer information at the point of enrolment.
