How the government became a student loan shark - My Ways (feat. Lil Jokey) - Single Recap

Podcast: My Ways (feat. Lil Jokey) - Single

Published: 2026-02-06

Duration: 50 minutes

Guests: Natasha Clark, Katie Ogden, Alex Stanley

Summary

The UK student loan system is likened to predatory lending, with terms that can change unilaterally and repayments that many will never complete. Designed as a de facto income tax, it disproportionately affects lower-income graduates.

What Happened

The episode opens with the story of Tom, a 22-year-old from Manchester, who left university with £58,000 of debt and now owes £57,000. This sets the stage for a deep dive into the UK student loan system, described as a de facto third income tax for young people. Despite accruing debt, many students like Amelia and Campbell find themselves further indebted due to interest rates that outpace inflation. Rory, a former video producer, paints a stark picture by comparing the student loan system to predatory money lending, emphasizing the lack of borrower protection against changing loan terms.

The podcast examines how the system, introduced under David Cameron, George Osborne, and Nick Clegg, raised tuition fees significantly. This shift led to a £267 billion student loan burden for the UK government, projected to reach £500 billion by the 2040s. With only 56% of borrowers expected to repay their loans, the system functions more like an income tax, especially for lower-earning graduates who may never clear their debt.

Lower-income students are particularly disadvantaged, with maintenance grants replaced by loans, increasing their financial burden. As a result, poorer students graduate with more debt than their wealthier peers, entrenching economic disparities. The complexity of the system, with its numerous plans and interest rates, further complicates repayment efforts, leading to high marginal tax rates for graduates earning just above the repayment threshold.

The discussion highlights the regressive nature of the system, where poorer and middle-income students end up paying more over time. The episode explains how the repayment threshold freeze at £28,500 means graduates will pay about £3,000 more on average. This situation is exacerbated by the fact that 65% of students work part-time during their studies, with 24% finding it unsustainable.

Alex Stanley from the National Union of Students points out the system's role in widening the gap between rich and poor, as lower-income students accumulate more debt. Katie Ogden from the IFS describes student loans for lower earners as a permanent extra tax on work, concentrated on those early in their careers.

To address these issues, the government plans to create 100,000 new apprenticeships as an alternative to university education. However, the episode suggests that many graduates are left in non-graduate jobs, questioning the financial return on investment of a degree. The Treasury's £300 billion student debt is also noted as a financial challenge for the government.

Key Insights