‘Scandalous’ master’s loans ‘forgotten’ in student debt debate

Calls to reform England’s student loan system should not forget about the “scandalous” state of funding for postgraduate degrees, critics say, with a third of courses now costing more than the value of the entire master’s loan and repayment thresholds frozen below minimum wage.

Introduced a decade ago, the once “transformative” system which offered government support for further university study for the first time, is now seen as being in dire need of reform.

Under the current terms, students can borrow £12,858 to cover fees and living costs, which the government stresses is intended as a “contribution” to the cost of study, rather than intended to cover the whole thing.

But new analysis from Times Higher Education’s Courses 360 database shows the average cost of a master’s course for 2025-26 entry was £13,071. Of nearly 9,000 full-time campus-based courses analysed, 37 per cent were priced above the value of the loan.

And while the amount that can be borrowed has risen from the £10,000 when first introduced, the repayment terms have stayed broadly unchanged, with graduates beginning to pay back the money when they earn more than £21,000 – below the £23,809 a person working full-time on minimum wage would earn.

They are also charged an interest rate of 3 per cent plus RPI inflation, the same as “Plan 2” borrowers for undergraduate degrees, which has attracted growing anger in recent months.

Mark Bennett, vice-president for research and insight at consultants Keystone Education Group, said when the master’s loan was first introduced in 2016 it was “transformational”, however they are “no longer fit for purpose” after years of stagnation.

“It certainly does need reforming, though there doesn’t seem to be much appetite or bandwidth for it,” he said, noting postgraduate study can be seen as a “luxury” so does not get the same political momentum as undergraduate debt.

Alex Stanley, vice-president for higher education of the National Union of Students (NUS), said it was “ridiculous” that the repayment threshold has not changed in 10 years, unlike undergraduate loans, and it should rise with inflation “at a minimum”.

He said: “There’s just no breathing space at all for master’s students. The whole point in having a threshold from my perspective is to give people that breathing space to find their feet post-graduation, and that just doesn’t exist for master’s graduates, particularly with the minimum wage going up.

“The fact that we haven’t seen this change is completely scandalous, and I think it speaks to a complete lack of attention that successive governments have shown towards young people.”

Given the amount borrowed is far lower than at undergraduate level, the majority of students can expect to pay the loan back in full within the 30-year repayment period – avoiding some of the issues seen elsewhere in the system – but Bennett said the high rate of interest will mean they pay back much more than they received, a source of much of the anger at the current system.

Paul Wakeling, a professor of education at the University of York, said master’s fees have increased “dramatically” in recent years, noting this risks making postgraduate education increasingly inaccessible to students from disadvantaged backgrounds.

The lack of government action means “we are just back to the situation that we were in before the loans unfortunately”, as “you can’t borrow enough to cover the costs”. He noted that master’s degrees are not included in universities’ access and participation plans, unlike undergraduate degrees, making it more likely that such efforts are overlooked at postgraduate level.

The NUS’ Stanley added the policy risks “putting people off doing a master’s” and “immediately puts prospective students from a writing participation background on the back foot”. 

He said the system creates “two tiers” of students, where some are able to pay back the loan upfront, whereas for the majority it’s an “accumulating burden of debt that only gets worse and worse as time goes on, so the question as to whether a master’s is a good investment is a lot easier to answer if you’re in a better financial position”. 

Reform, while needed, is “complicated”, said Bennett. Setting the threshold at that of the undergraduate loan (currently at £28,470 for “Plan 2”) would be “fairer in principle, but tricky in practice”, as graduates would face a “cliff edge” of paying back 15 per cent of their earnings above the threshold, and it would mean “postgraduate loans become much less likely to be repaid and lending becomes much more expensive”.

The Lifelong Learning Entitlement (LLE), which does not include postgraduate education, was a missed opportunity to consider wholesale reform of the wider student loan system, he added.

Providing funding equivalent to four years of study, which can be accessed more flexibly, the LLE may actually create potential “perverse incentives around student choice” over postgraduate study, said Bennett, as “why would” students opt to do a postgraduate degree on an “inadequate” loan, “when they could fund up to another year at level 6, and actually have the fees covered?”.

A Department for Education spokesperson said: “This government is reforming the student finance system to deliver a fairer deal for students in the future, including by reintroducing targeted maintenance grants for undergraduate study.

“We’re making the tough but fair decisions needed to protect taxpayers and students. Lower-earning graduates will continue to be protected, with any outstanding loan and interest written off at the end of the loan term.”