| Practice area: | Education and Labour Markets | Higher education |
|---|---|
| Client: | N/A |
| Published: | January, 2026 |
| Keywords: | economics of education higher education 2026 Public Policy |
There has been wide-ranging coverage of the recently announced freeze to the Plan 2 student loan repayment threshold in England (e.g. The Times, Guardian, and Financial Times), as graduates and the media begin to understand that the majority of Plan 2 graduates are unlikely to ever pay off their loan balance within the 30-year repayment period.
While the policy was announced by the UK Government in the November 2025 budget, the Welsh Government has not yet announced whether it will follow suit. The potential policy shift is even more important in Wales as, unlike for England, all current students are still on Plan 2 once they graduate. We assessed the impact of the potential threshold freeze on the 2025-26 cohort of Welsh domiciled students.
Overall, if the Plan 2 freeze were to be implemented in Wales, graduates’ average lifetime repayments would increase by £3,300 for men (from £65,600 to £68,900) and by £5,100 for women (from £39,000 to £44,100).
However, we find that only lower- to middle-income graduates (1st to 4th decile for men, and 2nd to 8th decile for women) would be affected by the threshold freeze. This is because their earnings are insufficient for them to ever be expected to fully pay off their loan (i.e. they make repayments for the entire 30-year repayment period). In contrast, higher-income graduates would be basically unaffected by the Plan 2 threshold freeze.
More detailed analysis of the potential implementation of the threshold freeze in Wales can be found here.