Student loans should no longer be called a ‘loan’

Jo Johnson made statement after being pushed by Martin Lewis at’s Conservative Conference fringe

Today, Universities Minster Jo Johnson finally agreed student loans should be called 'graduate contributions' during a Conservative Party Conference fringe event hosted by the UK’s biggest consumer website,

On the subject ‘Are student loans broken?’, founder Martin Lewis and Universities Minister Jo Johnson were there to debate how the current system could be fixed if we stick with it, following the announcement at the weekend that the repayment thresholdwill be raised to £25,000.

Key elements of a fiery debate included Martin pushing the minister on:

- Maintenance loans not being big enough.

- The lack of transparency over the parental contribution.

- The lack of trust in the system after last year’s retrospective hike in student loan repayments.

Yet the key concession came over the framing of student loans. Martin Lewis has campaigned to rename student loans since 2012, arguing that the word ‘debt’ puts people off higher education – when in reality for most it works more like a tax and you repay 9% above the threshold for 30 years.

Martin said: "The language of debt is psychologically damaging, it should not be called a debt.

"For over 20 years we have educated our youth into what we call a debt, and we have never educated them about debt properly.We've inured an entire generation into borrowing, because if we say you've got to get a debt to go to university, they get their credit cards and their payday loans. It's been tremendously damaging.

"The language of debt is misleading. I can't explain the system because everyone says 'but I'm going to have this debt hanging over that I'm going to have to repay' – no, this is a contribution system in proportion to your financial success after university.

"My big ask, if you want to fix this, if you want to stick with this system? Get rid of the name of debt.This in every other country is called a graduate contribution system.

"But going with that, don't do that in isolation. Give people a guarantee of what can change and what can't change. You want to make changes? Fair enough, that's politicians' wit and will. But be really upfront. It will be wiped after 30 years. The interest will be related to inflation, though we might change exactly the proportion it relates to inflation. You will repay 9% above a certain set threshold, but we may change the threshold.

"Call it a contribution system. Lock it in, give people respect so they know exactly what they'll sign up to. People might understand it better, might respect it better, and might start to understand your argument a little bit better, that it's shared between the individual and the taxpayer.

"Right now the system's broken - because it ain't a loan, and we call it one."

Jo Johnson responded:

While the Minister has referred to ‘graduate contributions’ before, this is the first time he has explicitly agreed to rename student loans.

Speaking about the name change in response to Martin, the Minister said: "We are in agreement. I think he's absolutely right, this should be seen best as a graduate contribution. It is clearly a time-limited graduate contribution, because it only lasts 30 years and it's also an income-linked time-limited graduate contribution.

“So I think we do need to work on the language and cease to use the terminology of debt and loans, and it has to be understood as a time-limited and income-linked graduate contribution that people are making."

See Martin’s Student Loans Mythbusting guide for more information.


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Katie Watts

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About Martin Lewis: Martin Lewis OBE, Money Saving Expert, is the journalist and consumer campaigner who created and is now the site’s Executive Chair. Martin also founded and chairs the Money and Mental Health Policy Institute charity.

He’s the UK’s most-googled man, Citizens Advice’s Consumer Champion of the Year, and has spearheaded major financial justice campaigns including bank charges reclaiming (over seven million template letters downloaded), PPI reclaiming (over six million) and a successful large-scale campaign to get financial education in schools. He has his own prime-time ITV programme, The Martin Lewis Money Show, as well as a range of other regular media slots. He was appointed OBE in the Queen’s Birthday Honours in June 2014.

About is dedicated to cutting consumers’ bills and fighting their corner. The free-to-use consumer finance help resource aims to show people how to save money on anything and everything, and campaigns for financial justice. It was set up in 2003 for just £100, and its free-to-use, ethical stance quickly made it the UK’s biggest independent money website, according to internet ranking site, and the number one ‘Business and Finance – Business Information’ site, according to Hitwise. It has more than 12 million people opted-in to receive the weekly MSE’s Money Tips email, and more than 16 million unique monthly site users who visit more than 28 million times a month. In September 2012, it joined the Group PLC.