Committee finds "mis-selling" in government's own promotional material

The House of Commons Treasury Select Committee has concluded that the government's promotion of student loans in England and Wales amounted to mis-selling, in a report published on or around July 7, 2026 The Guardian. The finding follows the committee's inquiry, "Student Loans and the Taxation of Graduates," and rests on evidence gathered from a survey that drew more than 52,000 responses — a scale unusual for a select committee exercise, and one the committee itself has cited as underpinning its conclusions The Guardian.

The committee, chaired by Meg Hillier, identified three specific instances it classifies as mis-selling. First, YouTube videos and slides used in government promotional campaigns did not disclose that ministers retained the power to retrospectively vary loan terms. Second, promotional material comparing monthly student loan repayments to a mobile phone contract was, the committee found, inaccurate for higher earners. Third, the Student Loan Company's application process failed to make clear that repayment terms could be changed after a loan was taken out The Guardian. More than half of the 52,000 survey respondents told the committee they had not understood the terms and conditions of their loan before taking it out.

The committee has also stated that ministers carry a "moral obligation" to reverse the freeze on the Plan 2 student loan repayment threshold, language repeated in the Treasury Committee's own published summary of the inquiry findings Treasury Committee. Hillier characterised reversing the freeze as "a modest change that would not eat up vast resources," framing it as a low-cost correction rather than a major fiscal commitment.

The mechanics of the threshold freeze

Plan 2 loans apply to students from England who started courses between September 2012 and July 2023, and to students from Wales who started from September 2012 onward, including those currently enrolled. When the scheme was introduced in 2010, the government committed to uprating the £21,000 earnings threshold annually in line with earnings growth from 2016 onward. That commitment has been interrupted twice: the threshold was frozen from 2016 to 2018, and again from 2021 to 2025 The Guardian.

Chancellor Rachel Reeves has since announced that the Plan 2 threshold will be frozen again, this time at £29,385, for three years from April 2027. Above that threshold, graduates repay 9% of earnings. Freezing the threshold while wages rise pulls more graduates into repayment and increases the effective real-terms burden on borrowers even without any change to the headline interest rate or repayment percentage — a mechanism the committee's report frames as central to its criticism of successive governments' approach to loan design. Separately, in April 2026 the government introduced a cap on student loan interest rates of 6%, a measure that addresses interest accrual but does nothing to offset the threshold freeze's effect on repayment volume.

The committee's report describes the pattern bluntly: successive governments, it says, have "taken the politically convenient option of loading burdens on to younger generations, hoping that they will not notice until future years." That framing places the threshold freeze within a longer history of policy choices rather than treating it as an isolated fiscal decision.

Evidence base and prior scrutiny

Written evidence submitted to the inquiry reinforces the mis-selling finding. Submission SLTG0114 argues that large loans of complex structure have been sold to young borrowers in terms that constitute mis-selling Treasury Committee written evidence. Submission SLTG0185 goes further, containing a section explicitly titled "The Systematic Mis-Selling of Student Loans" Treasury Committee written evidence. Both submissions predate the committee's final report and appear to have informed its conclusions, though the committee itself does not attribute its findings solely to these submissions.

The inquiry has drawn attention beyond Westminster. BBC News covered the report under the headline "Phone contract comparisons amounted to mis-selling student loans, MPs say" BBC News, and consumer finance broadcaster Martin Lewis examined the inquiry in a BBC programme in March 2026, months before the report's publication BBC. BBC reporting at the time the inquiry was launched framed its central question as whether the student loan system, as designed and communicated, is fair to those who borrowed under it BBC News.

The distinction the committee draws — between the interest rate cap it credits the government with introducing and the threshold freeze it wants reversed — matters because the two levers work in opposite directions on repayment burden. Capping interest limits how fast a balance grows; freezing the threshold accelerates how much of a graduate's income goes toward repayment regardless of balance size. A government can tout the former as relief while the latter quietly does more to determine what borrowers actually pay each month.

Whether ministers act on the "moral obligation" language is a political question the report does not resolve. The committee has no power to compel a change to fiscal policy on student loans; that decision rests with the Chancellor and Treasury. But the mis-selling finding, grounded in a survey response rate the committee has emphasised as unusually large, adds pressure that previous critiques of loan communications have not carried.