Pensions minister on student loan unfairness: It’s not my job ...Middle East

The Pensions Minister has said it is “not my job” to defend the student loans system, as he sought to draw a line between government commitments to pensioners and the growing debt faced by younger graduates.

Torsten Bell was asked by The i Paper why the Government is maintaining the state pension triple lock at the same time many graduates on new student loans, known as Plan 2 student loans, see their balances grow due to high interest rates.

Speaking at the Pensions UK Investment Conference Bell said: “We’ve already brought back maintenance grants so we’re already making improvements to the system, and we’ll keep looking at it. It’s not my job to defend Plan 2 student loans.”

He added: “We are now protecting young people’s incomes as well. Look at what’s going on in childcare. Older generations didn’t have any free childcare, even through the last 20 years.

“If you look at areas of the state that have expanded, the provision of childcare is probably the biggest. What actually matters for young people is building houses.”

Triple lock to stay for this Parliament

Bell, who has held the role since January 2025, acknowledged the student loans system has problems but emphasised it was “introduced by previous governments”, pointing to decisions such as tripling tuition fees and scrapping maintenance grants.

Plan 2 loans, introduced in 2012, apply to students at most English universities who took out loans above a certain threshold for tuition fees.

Under this plan, graduates start repaying their loans once their income exceeds £28,470 – rising to £29,385 in April, with interest accruing at rates tied to inflation plus up to 3 per cent depending on earnings.

Many borrowers are seeing their balances grow faster than they can repay, leaving some graduates facing debt that far exceeds the original tuition fees.

According to a report in the Financial Times on Wednesday, the average debt of someone on a Plan 2 loan is £43,645 – compared to £10,252 for Plan 1 loans.

Critics have questioned why the government continues to protect older people’s incomes through the triple lock – which sees the state pension increase in line with the highest of the inflation, wage growth or 2.5 per cent – while many graduates see their debts balloon under the inherited Plan 2 system.

The triple lock has seen pensions rise significantly over the last few years due to higher inflation and wage growth.

But Bell reiterated that it will “remain in place for the duration of this Parliament”, as promised in the Labour manifesto.

He said the triple lock is vital for more than a million pensioners whose only income is the state pension, and that means-tested support in the wider system is limited.

He added: “I would separate [the] view about the level of the state pension – you can tell from our manifesto that it should be a higher level relative to average earnings across this Parliament. And then have a different view, if you wish to, about the lock mechanism, which is included.”

Expense of keeping the triple lock

The triple lock is widely regarded as one of the most generous pension protections in the world, but it comes at a cost.

Forecasts from the Institute for Fiscal Studies (IFS) suggest that keeping it in place could add billions to public spending over the course of the Parliament, with some estimates putting the price tag at around £12bn per year if wage growth continues to exceed inflation.

Some commentators and politicians have suggested replacing the triple lock with a “double lock”, which would maintain increases in line with inflation or 2.5 per cent but remove the wage growth element.

Proponents argue this would reduce the strain on public finances while still protecting pensioners from falling behind the cost of living.

But others counter that such a move would be seen as a broken promise and would hit lower-income pensioners who rely entirely on the state pension.

He also addressed upcoming changes to inheritance tax (IHT), which will see pensions included from next year.

Advisers warn this could encourage retirees to spend or gift their savings, reducing the Treasury’s tax take.

On this, he said: “People can and should make their choices. Our job is to set the rules. Pensions are here to provide incomes in retirement. That’s what our job is set out clearly.”

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The minister’s comments come amid a growing debate over intergenerational fairness, with critics arguing that guaranteeing pensioner incomes through the triple lock while younger people carry rising student debts risks creating a generational divide.

Some campaigners have called for reform of Plan 2 student loans, citing the growing number of graduates whose balances are now higher than their starting salaries.

Proposals range from reducing interest rates to more targeted debt forgiveness, though the government has resisted large-scale changes.

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