'Deeply misleading' school talks compared student loans to £30 phone contracts

In a presentation to teenagers a decade ago, the government compared student loan repayments to a £30-per-month phone contract, according to BBC News.

The lecture was part of a series of student finance tours that were delivered to thousands of schools between 2011 and 2017 by graduates who were invited to speak to pupils and parents on the then-government's behalf.

The graduates were told to avoid words [or] terms like debt, with one former host now telling the BBC that he had "sold his soul to the devil.

The Department of Education (DfE) reported that the speeches were delivered under previous administrations and that current ministers had concentrated on making the system more accessible.

The National Union of Students said the Plan 2 loans – which have been heavily criticised this year due to their high interest rates and reforms to repayment thresholds – had aged poorly and were "deeply misleading.

According to a government contract with Event Marketing Solutions (EMS), a private company that recruited graduates and hosted tours, the aim was to convert young people from poverty to "real [higher education] candidates.

The BBC learns that the presentation, script, and notes were either created or approved by the Department of Education.

According to one script from 2016-17, applicants should do their research and be told where to find more details. Graduates, if possible, became alarmed after the presentation, and the script refers to an accompanying leaflet, which the BBC has yet to see.

However, the BBC has interviewed former presenters and interviewed two others who claim that the risks of taking out a loan were downplayed.

The revelations have occurred as the government continues to pressure the government to alter the repayment terms of Plan 2 student loans, which were issued in England between September 2012 and July 2023 and are now available in Wales.

Prime Minister Sir Keir Starmer said last week that he would look at ways to make them "fairer.

Ed, one of the 2016 hosts, said he was helping those who were planning to attend university at the time, but he now finds one part of the script in particular seems to be a "sales tactic.

It gives an example of someone earning over £25,000 in a section describing graduates who earned 9% of what they earned above the repayment threshold, which was £21,000 at the time.

"You'll pay 9% of £4,000. In case you're curious, it's worth less than £7 a week – or just under £30 a month.

"I don't know about you, but my phone bill relating to that may help put things into perspective and remind you that monthly payments are entirely affordable.

Ed said he could see the example given in the script, which was correct for Plan 2 loans at the time, was meant to attract teenagers.

However, he said the significant life decision to take out a student loan is "completely different.

According to Student Loan Company estimates, the average graduate now leaves university with student loans totalling £93 a month, with repayments made via HMRC averaging £93 per month.

However, with interest being added to the total debt each year and any remaining balance being wiped at the end of the loan's term, many students are not expected to pay it in full.

Since moving to Australia in 2018, Ed said he has failed to pay his student loan repayments. Despite this, he says he was lucky to have gone to university before Plan 2 loans were introduced.

I feel like I've kind of sold my soul to the devil a little bit,

he said.

The majority of students who enrol in university in England, Wales, and Northern Ireland take out student loans to pay for tuition. In several cases, including in Scotland, where tuition for Scottish students is free, students take out loans for living expenses as well.

However, repayment plans will differ based on where they live and when they went to university.

Following the government's decision to freeze the salary ceiling above which repayments must be made in England, the latest scandal surrounding Plan 2 loans has surrounded the government.

The amount graduates are expected to earn before making student loan repayments will rise from £28,470 to £29,385 in April, but the number will remain at the same level as inflation rises. That means graduates who have seen their salaries rise with inflation will end up paying more.

The thresholds may have changed, but the repayment rate hasn't. So Plan 2 graduates who are currently earning more than £4,000 per month will still pay 9% of the amount, the same £30 a month described in the 2016-17 script.

However, those on higher salaries must pay more. For example, anyone earning more than £50,000 will be paying more than £160 a month.

Katie, a London resident, applied for the position of delivering government speeches a decade ago because she wanted to encourage people from impoverished backgrounds to enrol in university.

I've got friends in that category and they're referring to their student loan as their second mortgage,

she said.

The script warns students that their loans will accrue interest, but that there is additional money added to the equation, as well as the Retail Price Index (RPI) survey, which is not included in the study.

Presenters were told not to

get bogged down in explaining how interest is calculated

and that they should "avoid words/phrases like debt, poor/poorer, and free money, as I can guarantee.

There are some solid facts in there that weren't conveyed to students at the time,

Katie said.

It feels unfair; it feels unjust.

The script had aged so poorly, according to Amira Campbell, president of the National Union of Students United Kingdom, and the comparison to a phone contract was "deeply misleading.

The tour was a chance to have honest conversations, she said, but the script "reads as a sort of student debt brochure that makes it all seem prettier, lighter, and more affordable than it really is.

Funmi Olufunwa, a financial educator and consumer advocate, said it was strange that some interest rates were marked not for the presentation because it is "one of the most basic pieces of information.

However, Nick Hillman, the head of the Higher Education Policy Institute, who aided the government when Plan 2 loans were being developed, said the tours demonstrated that the government did demonstrate how the program worked to young people.

The script was very defensible, he said, and the phone contract comparison was fair, because the script was meant to reach teenagers "at their level of knowledge.

Student loan repayments were generally affordable, he said, and payments for several individuals were "a few pounds a week.

One may have included additional details in there with the benefit of hindsight. However, there is nothing in there that is factually inaccurate.

There's nothing in there that would be counted as misselling," he said.

"These tours were operated between 2011 and 2017 under previous governments, according to the DfE.

"This government has concentrated on making the system more competitive, including by reintroducing targeted maintenance grants to benefit students from lower-income families and broadening access to higher education and high-quality training.

The student finance tours were commissioned, contracted, and led by the then-government, according to a spokesperson for the Student Loan Company.

SLC's job is to implement government student finance policies, helping customers learn about their eligibility, how to apply, their repayment obligations, and how repayments are processed,

they said.

"We share this information and recommendations, but we do not provide financial advice or promote student finance.

The EMS Group declined to comment.

Ruth Green, Nathan Standley, Hope Rhodes, Hayley Clarke, Emily Holt, and Bernadette McCague contributed to this.