The repayment threshold for plan 2 student loans currently sits at £28,470, this will be raised in April 2027 to £29,385 and then frozen for three years, until 2030-31. This means graduates earning over this amount will be dragged into repaying more.

This freeze effects millions of students on plan 2 loans, who would have started their course between 1 September 2012 and 31 July 2023.

The Budget Red Book said: ‘Graduates generally benefit from higher earnings, and ensuring that they repay more of their loan is fair for those workers who have not gone to university’.

The leaked Office for Budget Responsibility (OBR) Economic Outlook for November 2025, released hours before the chancellor stood up to deliver her Budget last week, said these changes would raise £400m per year, as a higher portion of income is subject to repayment and a higher interest rate.