More than two million student loan borrowers saw their outstanding balances increase during the 2025/26 financial year despite making repayments, according to figures obtained by Harrogate and Knaresborough MP Tom Gordon.
The figures, provided by the Department for Education in response to a parliamentary question, show that 2.09 million borrowers funded by Student Finance England saw interest added to their loans exceed the amount they repaid.
The figures cover borrowers who were liable to repay their loans and had made at least four repayments during the financial year. They include people who stopped making repayments or ceased to be liable to repay part-way through the year.
Of those whose balances increased, nearly 1.6 million were on Plan 2 loans, 340,000 were on Plan 1 and 158,000 were on Plan 3.
Sharp increase over five years
The number of borrowers whose balances increased despite making repayments has risen substantially since 2021/22.
- Plan 1: 116,000 in 2021/22, rising to 340,000 in 2025/26.
- Plan 2: 628,000 in 2021/22, rising to 1.592 million in 2025/26.
- Plan 3: 75,000 in 2021/22, rising to 158,000 in 2025/26.
The figures for Plan 2 and Plan 3 have increased in every year covered by the data. Plan 1 figures peaked at 484,000 in 2023/24 before falling to 431,000 in 2024/25 and 340,000 in 2025/26.
The figures are rounded to the nearest thousand, and borrowers with more than one type of loan may appear in multiple plan categories.
Tom Gordon calls for student finance reform
Tom Gordon, the Liberal Democrat MP for Harrogate and Knaresborough, said the figures highlighted the financial pressure facing graduates.
Tom Gordon, Liberal Democrat MP for Harrogate and Knaresborough, said: We knew it was a grim time for graduates. People are putting off starting families or unable to get on the property ladder because they simply can’t afford it.
But these figures spell out the problem in black and white. Two million loans where the debt has increased despite repayments. You need to make about £66,000 a year before your repayments will outstrip the interest.
The government needs to take action, stop using this generation of graduates as cash cows and give them a fair system like the one they were promised.
Gordon has raised concerns about student loan repayment arrangements following the previous Chancellor’s decision to freeze repayment thresholds. He presented the Student Finance Review Bill in Parliament on 15 September 2026 under the 10-Minute Rule procedure.
The proposed Bill would require the Secretary of State to review student finance in England, including repayment arrangements and thresholds, the terms and conditions applying when loans were issued, and the relationship between repayment thresholds and average earnings.
How the figures are calculated
Responding to Gordon’s parliamentary question, Education Minister Josh MacAlister said the figures covered borrowers funded by Student Finance England who were domiciled in England when they applied for their loans and studied at a UK university, including universities in the devolved administrations. They may now live anywhere in the UK.
Student finance is a devolved matter, meaning the governments of Scotland, Wales and Northern Ireland are responsible for equivalent figures for borrowers who were domiciled in their respective nations when they applied for their loans.
The Department for Education also stressed that outstanding balances, including accrued interest, are cancelled at the end of the loan term, with no detriment to the borrower.
The data therefore shows how many borrowers experienced an increase in their outstanding balance during the year, rather than how many will ultimately repay their loans in full.