A graduate has expressed shock after discovering that nearly £7,000 of her £40,000 student loan is interest accrued since graduation. Hannah Ahmed, who graduated in 2024, said the debt has left her feeling 'speechless' and worried about her financial future.
Graduation Day to Debt Reality
When Hannah walked across the stage in July 2024, student loan repayments seemed distant. Two years later, with a salary below the repayment threshold, she owes £38,991.28 – of which £6,828.28 is interest added over five years. Her original loans totalled £32,172, covering tuition and maintenance.
'The statement left a lump in my throat,' said the 22-year-old. 'I expected a huge figure, but the interest breakdown was frightening.'
Plan 2 Loan System
Hannah is on the Plan 2 system, which applies to students between 2012 and 2022. Interest is variable: during study, it's Retail Price Index (RPI) plus 3%. After graduation, it's RPI plus up to 3%, depending on income. Over five years, her rate ranged from 3.2% to a staggering 8%.
The government website confirms that interest can change based on circumstances. Many graduates face similar situations, with some owing over £50,000.
Long-Term Impact
Hannah's loan will be written off after 30 years – when she is 51 – if not repaid earlier. She wishes the long-term consequences had been clearer when she was 17. 'A simple online form separates you from a lifetime of debt,' she said.
Parliamentary Inquiry
An inquiry by MPs into England's student loan system is underway, taking evidence from experts and student groups. With a third of people believing a degree isn't worth the cost, the future for graduates remains uncertain.
Hannah urges young people to understand the implications before taking out loans. 'The choices you make at 17 have lasting impacts,' she added.
