Almost half of UK graduates say their student loan was mis‑sold

Nearly half of former students with a Plan 2 student loan believe they were mis‑sold their loan at the time, according to a new survey of 1,000 borrowers commissioned by thinkmoney. The research found 47% felt mis‑sold, while 60% said they didn’t receive proper advice before taking out their loan. More than half (53%) say they wouldn’t take the loan again if given the choice.

This comes amid growing concern over confusing terms, frozen repayment thresholds and interest charges that many borrowers describe as a “stealth tax”.

Vix Leyton, our consumer expert here at thinkmoney, says the findings highlight a systemic failure. She adds: ““This points to a much bigger problem than individual regret. Student loans are one of the largest and longest-lasting financial commitments many people will ever make, yet for years they have been treated as a tick-box exercise rather than a major financial decision that deserves proper explanation.

“For many young people, this is their first experience of credit. But instead of meaningful financial education, the message has often been ‘this is just how it works’. When something that can follow you for decades is not properly covered within sixth form or college pastoral care, it creates a huge advice gap.”

She warns that unclear letters, changing rules and inconsistent repayment patterns make it easy for young people to lose track of their debt, leaving them feeling misled years later.

Plan 1 vs Plan 2: who has which loan and why confusion is rising 

Borrowers typically fall under Plan 1 or Plan 2, depending on when they started university: 

• Plan 1: English and Welsh students who started before 2012. Repayments begin once income exceeds £26,900 from April 2026.  

• Plan 2: Students who started between 2012/13 and 2022/23. The threshold is £28,470, rising to £29,385 in April 2026, then frozen until 2030; meaning repayments rise as wages grow.  

Across both groups, borrowers say they lacked clear information: 

• 47% of Plan 2 and 34% of Plan 1 borrowers feel mis‑sold. 

• 60% of Plan 2 and 62% of Plan 1 didn’t feel properly advised. 

• Only 36% of Plan 2 borrowers and 16% of Plan 1 know their current loan balance. 

Frequent policy changes have worsened the confusion. Some Plan 2 borrowers are expected to repay around £16,000 more due to threshold freezes and rule tweaks.  

Frozen thresholds: why so many graduates feel short‑changed 

Freezing the repayment threshold means it doesn’t rise with inflation, so graduates pay more in real terms as wages increase. Experts warn this works like a “stealth tax”, with repayments rising year after year even when official thresholds stay the same.  

The government argues the freeze reduces the long‑term cost of the student loan system, since most Plan 2 borrowers don’t repay the full balance.  

Where students feel most mis‑sold: regional trends 

The study found big regional differences in the share of borrowers who feel they were mis-sold their student loans. Wales, the North West, and Northern Ireland were among the regions where the most borrowers felt they were miss-sold. In Wales, more than half of borrowers felt they were either mis-sold their student loan, or may have been mis-sold their student loan.  

• Wales: 18.8% yes, 33.3% yes/maybe

• North West: 16% yes, 28% yes/maybe

• Northern Ireland: 15% yes, 30% yes/maybe

• London: 12.7% yes, 29.7% yes/maybe

• Scotland: 12.3% yes, 15.1% yes/maybe

Major cities like Leicester, Cardiff and Manchester also had substantial amounts of borrowers who felt they were mis-sold their student loans. In Leicester, a third said a resounding “yes” when asked, while in Cardiff and Manchester, nearly one in five said the same:  

• Leicester: 30% yes, 15% yes/maybe 

• Cardiff: 18.8% yes, 33.3% yes/maybe 

• Manchester: 17.8% yes, 26% yes/maybe  

Vix adds: “When people later understand how interest works, how repayment thresholds have changed, or how long the loan will affect their earnings, it can leave them feeling misled and resentful.  

“Better upfront guidance would not stop people going to university, but it would stop so many from sleepwalking into a financial commitment they never fully understood.” 

Key takeaways 

• Nearly half of Plan 2 borrowers feel mis‑sold, and most say they weren’t given proper advice before taking out their loan. 

• Confusion spans both Plan 1 and Plan 2, with many graduates unaware of their current loan balance or how repayments are calculated. 

• Frozen repayment thresholds mean higher real‑term repayments, leaving many graduates feeling short‑changed as wages rise. 

• Regional concern varies, with Wales, the North West and Northern Ireland showing the highest levels of borrowers who felt mis‑sold. 

• Experts say poor early guidance and shifting rules fuel resentment, as graduates only understand the long‑term financial impact years later.