Three friends on their student debt: one paid off, one chipping away and one creeping up

When Lizzy, Libby and Charlotte met as freshers in 2012, their main responsibility was making it to lectures on time after early morning sports practice.

Their student debt, growing with interest from the day they took out their loans, was the last thing on their minds.

"The conversation was just so much less relevant at that time," says Charlotte. "As our careers have gone on and our paths have diverged more and more... those conversations start to come more to the forefront."

The friends, now in their early 30s, went to the University of Newcastle in the same year tuition fees tripled to £9,000 a year in England and Wales, and new loans called Plan 2 were introduced. Each borrowed about £37,500 to cover three years of tuition and living costs.

This year marks a decade since the first students in their year started repaying.

They may have started out in the same position, but over that time their career trajectories, life choices and earnings have shaped how much they've repaid, how much interest they've racked up, and how much they owe - with very different outcomes.

Student loans have come under scrutiny this year and there's been a particular backlash over Plan 2 loans. The government has said it wants to make the whole system fairer and campaigners are waiting to see what, if anything, changes in this month's Budget.

The anger about Plan 2 grew after the government announced updated terms in November. The income at which graduates start repaying is set to be frozen for three years, meaning graduates would start making payments sooner and pay more each month.

But it has also been brewing because the interest rate is higher than most other student loan plans, and many have seen their debts rise despite making monthly repayments.

"Since April this year, I've paid off in the region of £450 and I've accrued over £500 in interest," says Charlotte, a physiotherapist in Bristol.

She did a master's degree after uni and worked in the NHS before moving to the private sector. She earns about £50,000, but her loan is still going up.

"It makes me angry... it's just disheartening."

All three friends earn above the national average of £39,039. But research from the Institute for Fiscal Studies in February suggests Plan 2 graduates need to earn about £63,000 or more for a loan balance of £50,000 to start going down.

"I just had no concept that the debt was going to go up," says Libby, who remembers being in tears when her first student loan letter came through after graduating.

Now a project manager in a housing association and living in Worcester, she earns £72,000 and says her student loan balance has hovered at about £47,000 for a number of years. But she is currently on maternity leave and knows the interest will continue to accrue while her earnings - and therefore monthly repayments - drop.

"It feels like I will never pay it off, so it's something that I'm kind of just sucking up until the loan is written off," she says.

Her partner did the same course, starting a year before her and before tuition fees near tripled with the introduction of Plan 2 loans.

She says it is "so frustrating" that she has to pay out thousands of pounds a year more on her student debt.

Current and former students have different student loan plans depending on where they live in the UK and when they went to university. Plan 2 loans were given out in England for a little more than a decade from 2012 and are still issued in Wales.

The debt is written off after 30 years.

Lizzy, who studied economics and now works in financial services and lives in Bristol, is the highest paid of the friends, who bonded over rowing at university. She earns £85,000 a year and decided last year to clear her student debt by borrowing money from her family instead.

She had estimated that, based on her current earnings trajectory, she would repay her loan in 11 years. By paying off her debt in full early she has accrued less interest and hopes to repay her family in four years - saving about £20,000.

The amount graduates are voluntarily repaying towards their student loans has been growing. MoneySavingExpert.com founder Martin Lewis has warned that only higher earners could benefit from making voluntary repayments and most should not be "panicked into overpaying".

Finance journalist Holly Mead told the BBC it could make sense for those who are confident they will clear the debt and can make "a really significant overpayment" of tens of thousands of pounds, like Lizzy.

But smaller voluntary repayments could mean "you're just voluntarily paying more interest that you don't need to pay", she added.

Supplied

Supplied

Lizzy says she knows there are many "scenarios in which it doesn't pay off" for people to repay it early.

"I made a gamble on my future self to actually repay it," she says. "I'm in a very privileged position to be able to do that... Buying your way out of the system or not being in at all is in itself a luxury. It buys you freedom."

She and Libby finished their A-levels in 2011 but took a year out before going to university - Libby on a gap year, and Lizzy to resit economics after missing the grade she'd hoped for by a single mark.

Lizzy says she knew the delay would mean her fees would be higher, but "it was never explained" that the repayment terms would "look and feel very different".

"I think that's something that took me probably the best part of 10 years to understand," she adds, noting that her twin sister did start university in 2011 and had less debt as a result.

"Whether you went to uni in 2012 or 2011 actually financially has a huge impact, and it shouldn't," she says.

There's been lots of discussion about what teenagers were told about Plan 2 loans before they took them out. In March, a BBC investigation found the Department for Education (DfE) had compared monthly repayments to £30-a-month phone contracts in presentations at schools in England a decade ago.

An inquiry by MPs then concluded that this amounted to "mis-selling" because it was inaccurate for higher earners.

Last month, the government said university applicants in England would be given clearer information about student loans before they take them out.

Will we ever pay back our student loans?

England's controversial Plan 2 student loans have left many graduates frustrated.

All three friends follow the Rethink Repayment campaign on social media. It was set up by Oliver Gardner, who says the first Plan 2 borrowers are grappling with competing financial pressures such as getting on the property ladder and starting families.

"Maybe in your 20s, you can get away without saving as much, potentially. But now people are like, 'we need the savings to do these big things that we want to do with our lives'," he says.

The campaign wants a lower Plan 2 interest rate, a lower repayment rate and for the government to reverse that decision to freeze the threshold at £29,385 in England for three years from 2027 - which, while it is not the first freeze, sparked this year's debate.

Gardner said the government was "engaging much more openly and honestly" but the "the onus is very much on them in the upcoming October budget to take this by the reins" because graduates would not accept "minor tinkering around the edges".

The DfE said it was "taking decisive action to improve the student finance system and break down barriers to accessing university" by increasing maximum maintenance loans, reintroducing targeted maintenance grants and having "raised the repayment threshold for Plan 2 loans for the first time since 2021".

"We will continue to look for ways to make the system fairer for students, graduates and taxpayers in a financially sustainable way," it said.

Lizzy, Libby and Charlotte feel grateful they met back in 2012, and say that if they had their time again they would go back to university.

"I still wouldn't change my university experience," says Charlotte, "but would go back and do something different in the sense of my course and my career trajectory? Probably."