South West Devon MP supports major reforms aiming to cut graduate debt

Rebecca Smith, MP for South West Devon, has backed new proposals from the Conservative Party aimed at supporting young people.

The plans, described as a “New Deal for Young People”, have been set out under party leader Kemi Badenoch. They include changes to student loans, apprenticeships and National Insurance for young workers.

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One proposal is to remove real interest rates on Plan 2 student loans, and, under the plan, loan balances would not rise faster than Retail Price Index (RPI) inflation. 

This would apply to English undergraduates who started courses between the 2012/13 and 2022/23 academic years.

According to the Institute for Fiscal Studies, the average Plan 2 graduate would need to earn £66,000 a year to keep up with interest under the current system. 

The Conservatives say their proposal would reduce lifetime repayments for some graduates. 

They claim, for example, that a doctor graduating in 2029 with £80,000 of student debt could save £58,000 over their lifetime. 

A graduate with £40,000 of debt earning £50,000 a year could save £26,000 and repay their loan five years earlier than at present.

The party also says it would increase the number of apprenticeships for 18 to 21-year-olds by 100,000 a year. 

It plans to lift the funding cap for this age group and introduce an “Apprenticeships Guarantee” to give employers access to funded training.

In addition, employers would be offered up to £5,000 for each 18 to 21-year-old apprentice they hire who is a British citizen, under a scheme referred to as BRITS.

A further measure, called the “First Job Bonus”, would allow young people starting their first full-time job to keep the first £5,000 of National Insurance they would have paid. 

This money would instead go into a personal savings account, intended for a first home deposit or future savings.

The Conservatives say the policy package would be funded by reducing what they describe as low-value university degrees, which they argue add to public debt when loans are not fully repaid.

Youth unemployment and the number of graduates claiming benefits have been highlighted by the party as part of the reason for the proposals, with around 700,000 graduates nationally currently on benefits.

Ms Smith said: “Giving young people in South West Devon a decent start to their working life is so important. I know firsthand how paying student loan payments can hinder saving for your first home. 

“I also hear from local businesses who can no longer afford apprenticeships for local young people. That’s why our New Deal for Young People presents such a positive opportunity for local young people, their families and our local businesses.”