Student loans have been thrust to the top of the political agenda after Rachel Reeve’s decision to freeze repayment thresholds for plan 2 student loans, retrospectively changing the terms of a contract agreed to by 5.8 million British graduates. With two thirds of 2012-2023 graduates failing to even pay off the interest on their student loans, the freeze serves to ensure that graduates are forced to sacrifice even more of their salary. The Institute for Public Policy Research estimates that, when tuition loan repayments are combined with taxes and pension contributions, graduates earning between £28,470 and £50,270 face effective deduction rates of 42%, with these climbing as high as 76% for high earners. Since most borrowers will never repay their loans, this amounts to a financial penalty on Britain’s graduates that is leaving many feeling rather strapped for cash. 85% of graduates in a recent poll said that their vote at the next election would be influenced by student loan policies.

This particular political flashpoint concerns plan 2 graduates. For many current undergraduates, student debt seems abstract and a problem for the future. However, the malaise of increasingly oppressive student debt is an issue that they should care deeply about too. Current undergrads will get a slightly better interest rate fixed at the rate of inflation, rather than above it. However, fee increases, lower repayment thresholds, and a longer 40-year wait until the debt is forgiven will all serve to increase what they pay to the state. According to MoneySavingExpert, the government’s proportional contribution to each current undergraduates’ loans will drop to just 19p on the pound down from 44p, with the responsibility for financing higher education falling increasingly on the individual.

Exuberant loan repayment costs combine with a decreasing graduate premium – the additional earnings potential gained by obtaining an undergraduate degree. Add this to a challenging graduate job market, and the conditions faced by current students present a serious deterioration from the optimism of New Labour’s embrace of higher education – when the target of sending 50% of students to University was first set. This target has now been abandoned by Labour, while both the Conservatives and Reform have started to argue that we send too many people to University – especially on perceived ‘low-value courses’.

“The state is punishing them for the crime of studying a subject they enjoy and seeking to improve their career prospects”

The system, as it stands, is inherently unfair. Young graduates with little hope of paying off their debt are being burdened with endless loan repayments, the state punishing them for the crime of studying a subject they enjoy and seeking to improve their career prospects. Having an educated workforce benefits the country, and having widespread aspirations for higher education has been revolutionary for social mobility. Regrettably, it is those from disadvantaged backgrounds who suffer the most from student loan repayments, since they tend to borrow the most money, and don’t have wealthy parents to bail them out.

The political consequences of this are significant, and the government risks taking graduate voters for granted. Labour MPs have speculated that their loss in the Gorton and Denton by-election risks driving young graduate voters – who have overwhelmingly supported the party – to the Greens. While Reeves is attempting to stand firm, describing the status quo as ‘fair and reasonable’, other Labour MPs are showing disquiet. Deputy Labour Leader Lucy Powell described the system as “unfair” and “egregious”.

Therefore, current students should be worried about their loan, and should be pushing for change. The pertinent question is what form this change should take. The Tories’ proposal to reduce interest rates will make little difference to most – with the IPPR pointing out that this would only help the small minority who earn enough to pay off their entire loan.

“Ultimately, those most susceptible to fears around financial sustainability are students from disadvantaged backgrounds.”

Some would abolish student loans altogether. Stretched government budgets, however, will not offer the room to accommodate this. Forcing the taxpayer to fund the entirety of a student’s education, furthermore, could risk tipping the balance of unfairness too far away from the graduate, as those who did not attend university are included in footing a significant bill.

Others have suggested that the root of the problem is that there are too many attending university. A recent report from think-tank The Centre for Social Justice has accused an emphasis on widespread access to high-education of delivering a “graduate excess”, where many are overqualified for available jobs. Much of this is exaggeration – having a degree remains a reliable, if substantially less potent, way to increase your earnings potential. Improving the quality of non-university routes in education and careers is certainly key to improving opportunities for young people, yet it is concerning that rhetoric is increasingly warning against attending university. Ultimately, those most susceptible to fears around financial sustainability are students from disadvantaged backgrounds. They should not be punished for their ambition, ambition which cannot be represented by numerical cost or benefit analyses. If students value their degrees, they should take notice of the increasingly dire situation, and push for change.

The IPPR, backed by a number of think-tanks and MPs, have called for adjusting repayment payment thresholds up and repayment rates down in order to decrease the financial strain being thrust upon young graduates. This is a crucial first step in reforming a system which is unfair and risks discouraging future generations from attending university at all. For both selfish and selfless reasons, current students should join young graduates, and start giving a serious damn about tuition fees.