Peter Lamb MP backs Labour change to protect Crawley’s graduates from interest rate shocks

Peter Lamb, MP for Crawley, has come out in support of a key change Labour has made to the student loan system to deliver stability and protections for graduates from escalating interest.

The Labour government has placed a cap on the maximum interest rates on Plan 2 and 3 student loans at 6% from 1 September, for the 2026/27 academic year.

The measure will protect students and graduates from the potential of inflation pressures due to the situation in the Middle East. Labour’s intervention means graduates will not pay the price for a war which the UK has no direct involvement in.

The reform removes the risk of any temporary increase in inflation causing loan balances to compound at an unsustainable rate, securing stability in the student finance system and protecting hardworking students and graduates at an uncertain time.

Crawley’s graduates with Plan 2 loans currently pay interest rates of between RPI and RPI plus 3%, depending on their earnings. Interest on Plan 2 and 3 student loans will be capped at 6% to protect borrowers. This will protect them from any short-term increase in RPI due to global shocks, such as temporary spikes in oil prices, outside of the government’s control.

It follows changes Labour has already made to the student finance system inherited from the Conservatives to make it fairer for students, graduates and taxpayers in Crawley. This includes increasing the repayment threshold for Plan 2 loans to £28,470 in April 2025 – its first increase since 2021. The second increase of the threshold, to £29,385, took place this month.

Since entering government in 2024, Labour has been committed to supporting the aspiration of anyone who can and wants to attend higher education including through the reintroduction of targeted, means-tested maintenance grants. The grants will provide students from low-income households with up to £1,000 extra support that will not need to be repaid, to ensure those from the poorest families receive more support without increasing their debt.

The Government has also committed to get two thirds of young people taking a gold standard apprenticeship or heading to university by the age of 25, restoring prestige to the skills and Further Education system.

MP for Crawley, Peter Lamb said:

“I know just how nervous everyone is about the impact that the situation in the Middle East could have on our economy – that’s the case across Crawley whether you’re a pensioner or a student.

“This announcement of a cap on the interest paid by those who took out a loan as part of their studies and will help many of those who live in Crawley”

“That’s why Labour is stepping in to shield people in Crawley. We won’t let our people bear the brunt of a conflict we never started and we refuse to get involved in.

“From support with energy bills to your student loan, boosting your pay to cutting the cost of your childcare, the Labour government is rising to the moment and showing we’re on your side.”