Analysis · IFS | Institute for Fiscal Studies · 12 February 2026
Are Plan 2 student loans 'unfair'?: What It Means for Your Student Loan
Written by Zubair Arshed FIA, Chartered Actuary
Fellow of the Institute and Faculty of Actuaries
Actuarial Post Life and Health Actuary of the Year 2024
The Institute for Fiscal Studies has raised the question of whether Plan 2 student loans are 'unfair', a debate that matters most to graduates who borrowed between 2012 and 2023. With the repayment threshold frozen until at least April 2030 and interest running above inflation for higher earners, the fairness question is really a question about who pays what over a 30-year window.
This analysis responds to reporting by IFS | Institute for Fiscal Studies. We recommend reading the original alongside it: Are Plan 2 student loans 'unfair'? ↗
What did the IFS actually report?
The IFS has posed a deliberately provocative question: are Plan 2 student loans 'unfair'? You should read that as a framing device rather than a verdict. The IFS has argued for years that the English system produces some odd distributional outcomes, and Plan 2 is the plan where those quirks bite hardest.
Here is the mechanic that drives the debate. Plan 2 applies to most people who started an English undergraduate degree between 1 September 2012 and 31 July 2023. You repay 9% of everything you earn above £29,385, the loan is written off 30 years after you first became liable to repay, and interest is charged on a sliding scale of RPI plus up to 3% depending on income. That combination of a long write-off period and above-inflation interest is unusual, and it is the source of most fairness complaints.
Because we only have the headline, treat the specific arguments as the established ones the IFS has made before rather than fresh claims. The core tension is simple: the system was designed so that high earners repay in full with interest, middle earners repay a lot but may never clear the balance, and lower earners repay little before write-off. Whether that is fair depends on where you sit.