Postgraduate Students Burdened by Dual Loan Debt
Deciding to pursue a master’s degree was not truly optional for Francesca Peters. After completing an undergraduate degree in biochemistry in 2020, she aimed to secure her ideal job. However, the only path into her chosen career required further education—and additional debt.
Having already accumulated over £60,000 in student debt from her undergraduate studies, Peters took out another loan for her master’s, increasing her total debt to £77,000.
“It just feels like a life tax,”she says.
“Because I’m never going to pay it off.”
At 27, Peters is among a growing group urging the UK government to reform the student loan system. Over the past year, there have been increasing calls to address the "unfair" terms of plan 2 loans, which millions of undergraduates in England and Wales took out between 2012 and 2023.
Recent figures from the Student Loans Company reveal that total student loan debt in England rose by 10.5% to £294.6bn in the 2025-26 financial year. Of the additional £28bn, more than £12bn was accrued interest.
Postgraduate Loan Terms Under Scrutiny
While much debate has focused on undergraduate loans, the challenges faced by postgraduate borrowers have received less attention.
“The terms for the postgraduate loan are some of the most egregious out there,”says Oliver Gardner, founder of the campaign group Rethink Repayment.
“Because the repayment threshold is so low. And the interest rate that can be charged is always so high.”
Repayments on postgraduate loans begin at a lower earnings threshold than undergraduate loans. Borrowers repay 6% of earnings above this threshold for postgraduate loans, compared to 9% for plan 2 undergraduate loans. Additionally, postgraduate loans accrue interest at the retail prices index (RPI) plus 3%, currently 6.2%, though this will be capped at 6% starting in September.
Graduates with master’s degrees often face simultaneous repayments on both undergraduate and postgraduate loans, with two separate deductions from their monthly salary.
Graduate Experiences Highlight Financial Strain
Headlines about the rising student debt prompted 22-year-old Mariella James to pursue a master’s degree in sustainability and management at the University of Bath. She hoped the qualification would enhance her employability—and it did.
Before completing her course, James secured a role as a social media manager at a sustainable coffee company. However, this did not alleviate her financial concerns. Approximately £60 is deducted monthly for her master’s loan, in addition to £15 for her undergraduate debt.
Her total debt has grown to £60,500, making even a brief look at her Student Loans Company account intimidating.
“I choose not to look,”she admits.
With debt now an inherent part of obtaining a degree, more individuals are taking on loans. Generally, graduates earn more than non-graduates, but when adjusted for inflation, graduate wages have declined in real terms.
Official data shows that lending for postgraduate studies in England increased by 8.7% last year, reaching £800m. Of the nearly £300bn in outstanding student loan debt, approximately £8bn is attributed to postgraduate degrees.
Calls for Reform of Postgraduate Loan System
Gardner emphasizes the significant financial burden faced by those with both undergraduate and postgraduate loans.
“The big feeling is that – if you have both an undergraduate and a postgraduate loan – the financial burden is so significant that it’s holding them back, particularly if you’re in a job that isn’t paying you huge sums of money.”
Rethink Repayment advocates for loans that function like traditional loans rather than lifelong taxes. Gardner outlines their demands: the repayment threshold should rise in line with wages, interest rates should be capped at inflation, and the repayment rate on plan 2 loans should be reduced to 5%.
A major criticism of the postgraduate loan system is that the repayment threshold has remained unchanged since 2016.
Peters concurs:
“It just doesn’t make any sense why they’re charging such outrageous interest rates and [don’t] also bring a postgraduate threshold in line with inflation,”she says,
“because £21,000 in 2016 is now worth £29,000. That’s a big difference.”
After completing her master’s in bioinformatics at Cranfield University, Peters immediately secured a stable position in pharmaceutical data. She has rapidly advanced in her career, but as her salary has increased, so have her loan repayments. Four years post-graduation, despite having repaid £3,067 as of February 2026, her loan balance has grown due to £3,186 in accrued interest.
“They’ve designed the system so that, basically, you’re trapped,”she explains.
Graduates Value Education but Seek Fairer Loan Terms
For graduates in fields requiring postgraduate qualifications, the decision to study further is rarely regretted. James states,
“Because it’s something that I knew I needed to do to get the career I’m in, I wouldn’t have changed doing the master’s.”
However, they agree that the postgraduate loan system requires urgent reform. Peters suggests that postgraduate debt should be interest-free.
“We want to repay these loans … but if they’re charging these outrageous interest rates, then you’re just fighting an endless battle.”
James believes that master’s fees should be reduced, as high costs exclude students from certain backgrounds. She recalls feeling like the
“odd one out”on her course because she was among the few who did not have fees paid upfront by her parents.
“I would love to pay it off in one go so I avoid the interest, but I can’t. And it just made me jealous of the people that didn’t have to get a loan.”
She adds that the current system
“is just tripping people up before they can really do anything with their lives”.
Government Response
A spokesperson for the Department for Education stated:
“We’ve raised the repayment threshold for plan 2 loans for the first time since 2021 and have capped maximum interest rates for plan 2 and postgraduate loans this year to protect graduates from rising costs.
Graduates – especially those with postgraduate degrees – generally benefit from higher earnings, and repaying their loan is fair for those workers who have not gone to university or graduates on lower salaries.”
