The government has “ignored” most of the Treasury Select Committee’s recommendations on how to address widespread public concern about England’s student loans system, but there is little prospect of new public money to fund a reform of student finance, experts have predicted.

Last weekend, the government published its response to the Treasury Select Committee’s Student loans: Broken and unfair? report. The committee’s report, released in July, concluded that the Plan 2 loan system had resulted in “most students never paying back their loan in full while engendering widespread dissatisfaction among graduates”. As well as high interest rates, borrowers were also irritated by changing repayment conditions, including repeated freezing of the repayment earnings threshold.

In that regard, that the actions of the Department for Education and the Student Loans Company (SLC) amounted to the “mis-selling” of student loans.

In its , released on 13 September, the government pledged to ensure that the student loans application process stipulates clearly that the terms of the loans are governed by legislation and can be amended by future policymakers.

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But the high-profile financial expert Martin Lewis, a long-term campaigner on student loans, told Times Higher Education (ɫ��ֱ��) that while the promise to “be transparent” about future debt is “important”, transparency is a “totally futile” solution for the “millions of students” already saddled with Plan 2 loans (issued between 2012-13 and 2022-23).

From the April after they graduate, Plan 2 borrowers make loan repayments of 9 per cent of their income above the repayment threshold, which former chancellor Rachel Reeves announced would be frozen at £29,385 for three years from April 2027.

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Lewis has called that freeze “immoral” because it is a “negative retrospective change of terms to loan contracts students, often aged 18, signed up to. Successive governments of both blue and red [stripes] have degraded those terms so that the loan now in practice works very differently to what people who signed up in 2012 signed up for,” he told ɫ��ֱ��.

Lewis agreed with most of the Treasury Select Committee’s recommendations, including that student borrowers should be afforded the same “fairness” protections as commercial borrowers. But he said these had been “ignored” by the government in its response.

“My big hope is that we’ll see a U-turn in the [autumn] budget,” he said, referring to the question of the repayment threshold freeze. “There’s an opportunity, and pressure needs to be put on [the government].”

On 15 September, Liberal Democrat MP for Harrogate and Knaresborough, Tom Gordon, introduced a private member’s bill calling for a fresh parliamentary mandate for a total structural review of student finance in England.

“No party has a great record when it comes to tuition fees or student fees,” Gordon acknowledged, speaking to ɫ��ֱ�� ahead of presenting his bill. “Parties of all political persuasions have contributed to this mess, and I think in a way that’s what gives me hope that we can try and find a solution across parties, because everyone knows it’s not working.”

Gordon agreed that the “real test” for the government’s intentions will be whether there will be “anything” in the budget relating to loans, pointing to education secretary Lucy Powell’s comments suggesting she’d put student debt “at the top of [her] in-tray”.

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The Conservatives support a review, according to the office of shadow education secretary Laura Trott, but voiced frustration at perceived inaction.

“Lucy Powell called the Plan 2 student loan system ‘egregious’, but Labour has done nothing to fix it,” Trott said. “The system is unfair and punishes young people who do the right thing, get a job and work hard, only to watch their student debt keep rising.”

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Under their New Deal for Young People, the Conservatives would cap interest on Plan 2 loans at RPI (the UK’s traditional measure of inflation), as well as vowing to “end the funding of dead-end degrees that leave young people saddled with debt and poor job prospects”.

But financial experts are pessimistic that the current government will have the financial headroom to introduce significant reforms.

Nicholas Barr, professor of public economics at the London School of Economics and Political Science (LSE), said it was “not enough to think about student loan design: one needs to think about how to pay for universities more generally”. But he was not hopeful of a rethink given the competing demands on the public purse from areas such as social care and defence.

“This sounds horribly pessimistic, but until there is more public money, I think it’s going to be short-term solutions,” he said.

Tim Leunig, a chief economist at research foundation Nesta, served as a senior UK government adviser for a decade, including as an economic adviser to two chancellors. He also expressed little hope for change.

The government, he suggested, had said “Let’s make noises about student debt” but then realised it had “no money” to address the issue.

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“I think nothing will happen,” he said. “This is a government that is learning the hard way that one plus one equals two, having been under the bizarre prior belief that this was not the case.”

georgia.luckhurst@timeshighereducation.com