Nurse's Student Debt Soars to £77,000 Despite Regular Repayments
An NHS nurse has seen her student loan debt skyrocket from £57,000 to over £77,000, even as she makes monthly payments, due to crippling interest rates that outpace her contributions. Helen Lambert, a 33-year-old nurse working in a high dependency unit within NHS Highland, borrowed £57,958 to attend Edinburgh Napier University and began repaying her loan in 2021 after starting her nursing career.
The Burden of Interest on Graduate Loans
Since commencing repayments, Lambert has paid more than £5,000, with deductions typically around £145 per month from her salary. However, these payments are dwarfed by the interest added to her debt, which can exceed £400 monthly, driven by rates that have reached as high as 8%. Her total outstanding debt had ballooned to £77,359 by the end of November, with another 25 years remaining in the 30-year repayment period.
Lambert expressed frustration, stating, "It is so disheartening to have this level of debt hanging over you with no achievable way to clear it or even reduce it while they add on upwards of £400 a month in interest." She does not believe her studies should have been free but criticises the system for making repayment seem unattainable.
Historical Context and Missed Support
Lambert was particularly affected by timing, as NHS bursaries—worth up to £16,454 annually and covering tuition fees and living costs—were axed in August 2017, just weeks before she started her course. A partial replacement grant of at least £5,000 per year was not introduced until September 2020, after she had graduated, leaving her cohort without financial aid during their studies.
She is one of millions of graduates with a plan 2 student loan, which includes individuals like Labour MP Nadia Whittome, who noted that her debt has barely decreased despite six years of repayments on a high salary. Whittome questioned, "If MPs are barely making a dent in their student loan debt after six years of repayments, what chance do other graduates have?"
How Plan 2 Loans Operate
Plan 2 loans apply to students from England who started university between September 2012 and July 2023, and those from Wales since September 2012. Key features include:
- Repayments are 9% of earnings over a threshold, currently £28,470 annually.
- Interest rates are linked to the RPI inflation rate, fluctuating monthly.
- Loans are written off after 30 years, regardless of the remaining balance.
For example, someone earning £38,470 pays £900 annually in repayments. The interest accrues from the first loan disbursement until full repayment or write-off.
Recent Policy Changes and Their Impact
In last year's budget, Chancellor Rachel Reeves announced a freeze on the salary threshold for plan 2 loan repayments until 2030, set to rise to £29,385 in April. This means borrowers will repay more as wages increase, effectively acting as a graduate tax. The move has sparked calls to rebrand student loans as such, given their similarity to income tax collection and the likelihood that most borrowers will never repay in full.
Managing Student Loan Debt
For those struggling with ballooning debts, experts advise caution. Unlike other debts, overpaying on student loans is often not recommended, as most borrowers will not clear the balance before it is written off. Save the Student and Martin Lewis of MoneySavingExpert suggest that only very high earners with strong salary prospects should consider extra payments.
Additionally, borrowers earning near the threshold should check for refunds if their annual income falls below it, as overpayments can occur with bonuses or extra shifts. In 2024-25, 643,000 plan 2 loan holders were eligible for refunds.
Government Response and Future Outlook
The Department for Education defended the system, stating, "This government is making fair choices to make sure the student finance system is sustainable – protecting taxpayers and students." They highlighted that the threshold freeze will not affect post-August 2023 starters and that lower-earning graduates remain protected with debt write-off after 30 years.
Lambert and others in her situation continue to hope for policy revisions, such as backdated funding or reduced repayments, but ministers have ruled this out. The debate over student loans as a graduate tax gains traction, reflecting broader concerns about fairness and sustainability in higher education financing.
