On Tuesday, Rachel Reeves admitted what many graduates already knew – that their loans are not a priority for this government. Though it isn’t surprising, it’s still galling to hear.
To understand why, you simply need to recap Labour’s various positions on student loans over the past few years.
In 2023, when the party was vying for power, it promised graduates it would reform the “broken system” and that they would pay less under Labour.
Yet in 2025, it chose to freeze the threshold at which graduates start repaying their loans – meaning thousands will shell out £260 more per year, on top of the thousands they are already paying.
At the start of this year, Reeves defended the system as “fair and reasonable”.
Now, a mere two months later, she said in a speech that the system is “broken” – but that it is not at the “front of the queue” in terms of her political priorities.
The statement is fairly obvious to anyone with a loan – specifically the Plan 2 form, taken out by those who went to university between 2012 and 2022, which has come under much scrutiny in recent months.
The terms of the loans were harsh to begin with – high interest rates and large amounts of borrowing mean many will be forced to pay thousands of pounds a year towards them until they are wiped in their 50s.
But they’ve also been systematically worsened every time the Treasury has needed quick cash, with Reeves’s latest freeze to the repayment threshold the most recent example.
Reeves’s admission that reforming the loans is not near the top of her to-do list will come as no surprise but it still feels like a kick in the teeth for thousands affected by the system, for three main reasons.
The first is because of the timeline outlined at the start of this piece. When Labour needed to court young graduates in the run-up to the election, it promised to make their situation better.
Now that it has power, it has done the opposite and actually made them worse. The subtext to Reeves’s message is this – ‘I’ve made a political calculation, and you are expendable.’
Politics is about priorities, she says. It certainly is, and she has clearly decided that university graduates in their 20s and 30s are a demographic they can afford to ignore, perhaps because she feels they have nowhere to go politically.
Can you imagine her telling retirees that she would love to keep the triple lock on their pensions, but that it was a question of priorities, so she needed to freeze them, for example?
The second reason that Reeves’s comments will be so frustrating is the way she appeared to play off addressing graduates’ concerns against child poverty.
“If you say to me, ‘you shouldn’t have done child poverty and you should have reformed the student loan system’, I just strongly disagree with that,” she said.
But the problem is that precisely nobody was saying that.
What Reeves has done here is a prime example of what’s known as the straw man fallacy – entirely fabricating an unreasonable position to then argue against.
The idea that she faces some sort of binary choice between removing the two-child benefit cap and reforming student loans is nonsense – and she knows full well it is.
There are multiple tax-and-spend levers she could pull if she really wanted to change the loan system – many of them far less emotive than the topic of child poverty.
The final frustration with Reeves’s comments is something that Labour politicians seem to have adopted broadly in recent weeks – acting as if the current problems with student loans are nothing to do with them.
This idea that the terms of the loans are a legacy arrangement passed on by the previous government, which Labour simply hasn’t got around to fixing yet, is an untruth.
As mentioned, Labour hasn’t just maintained the current loan system inherited from the Tories – it’s made it far worse by implementing a threshold freeze on the loan repayments, so that those earning barely above minimum wage will be forced to make payments by the end of the decade.
This untruth, that Labour is the unfortunate inheritor of the system, appears to be a tactical message. At a recent conference, pensions minister Torsten Bell said the same thing.
“It’s not my job to defend what the last Conservative Government did, tripling fees and introducing the loans,” Bell argued when asked about the perceived unfairness in the system – ignoring again, Labour’s own role.
The reality is that Labour made an active political choice at the last Budget – to extract more money from graduates to ease the financial burden in other areas.
Reeves herself was admitting this as recently as last month. “The truth is that to be able to bring down NHS waiting lists — and NHS waiting lists fell, I think, by about their greatest amount in 15 years last month — that does require putting money in,” she said at the time.
Reeves is ultimately right that politicians have to balance their priorities, but her statement makes clear that younger workers will never be at the top of the list.
Her statement has betrayed the reality – that younger people’s wants will be the first to go when the tough decisions we hear so often about have to be made.
She may have to bear the scars if they remember this at the ballot box as soon as this May.
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