A major parliamentary committee has concluded that the government misled students about how their loans work. The House of Commons Treasury Select Committee published this finding in July 2026 after examining evidence from over 52,000 people — a much larger survey than committees typically conduct The Guardian.

The committee, led by Meg Hillier, identified three problems with how the government promoted student loans in England and Wales. First, videos and slides used in government campaigns did not tell students that ministers could change loan terms after the loan was issued. Second, the government compared monthly loan repayments to a mobile phone contract — but this comparison was misleading for higher earners. Third, when students applied for loans, the company taking applications did not clearly explain that repayment terms could change later The Guardian. More than half of those surveyed said they had not understood their loan terms before borrowing.

The committee also said the government has a "moral obligation" to undo a freeze on how much money graduates can earn before they have to start repaying their loans Treasury Committee. The committee chair described this as an easy fix that would not cost much.

What is the repayment threshold, and why does freezing it matter?

Under Plan 2 loans — which apply to students from England who started courses from September 2012 onward, and students from Wales since September 2012 — graduates don't start repaying until they earn above a certain amount. When the system started in 2010, the government said it would increase that threshold each year to match wage growth, starting in 2016. But the threshold was frozen (kept flat) from 2016 to 2018, and again from 2021 to 2025 The Guardian.

Now the government has announced the threshold will freeze again at £29,385 for three years starting April 2027. Here's why this matters: imagine wages go up 2% a year, but the threshold stays the same. More graduates cross that line and start repaying, and those who are already repaying give up a larger chunk of their income. The government introduced a cap on interest rates at 6% in April 2026, which does slow down how much the loan balance grows — but it does nothing to stop the frozen threshold from forcing graduates to repay more each month.

The broader pattern is significant. The committee's report says successive governments have "taken the politically convenient option of loading burdens on to younger generations, hoping that they will not notice until future years." This suggests the threshold freeze is part of a longer-term approach, not a one-off decision.

Evidence from 52,000 people

Written submissions backed up the committee's findings. One submission argued that large, complicated loans were sold to young borrowers in ways that count as mis-selling Treasury Committee written evidence. Another was explicitly titled "The Systematic Mis-Selling of Student Loans" Treasury Committee written evidence. Both submissions shaped how the committee reached its conclusions.

News outlets covered the story widely. BBC News reported on the committee's findings under the headline "Phone contract comparisons amounted to mis-selling student loans, MPs say" BBC News. Consumer finance broadcaster Martin Lewis examined the inquiry in a BBC programme months before the report came out BBC. The underlying question behind the inquiry was simple: is the student loan system, as explained and sold to borrowers, fair to those who took out loans BBC News?

It matters that the committee distinguished between two different government actions. The 6% interest rate cap works one way — it slows how fast a loan balance grows. The threshold freeze works the opposite way — it forces graduates to repay more from their paycheck each month, no matter how fast their balance is growing.

What happens next?

The committee has no power to force the government to change its loan policies — that decision rests with the Chancellor and the Treasury. But the mis-selling finding, based on responses from over 52,000 people, carries more weight than earlier complaints about how loans were explained. It moves the conversation from "Are these loans fair?" to "Did the government deliberately hide important information?" How the government responds will determine whether this report becomes a turning point or simply another complaint in a long dispute over student loans.