Britons living in Europe face repayment hikes amid Reeves student loans row

Exclusive: UK graduates in Germany, Belgium and possibly other countries informed of rises as salary threshold is cut

Britons living in some European countries face a huge rise in their student loan repayments later this year, the Guardian can reveal, in a move that threatens to trigger a fresh backlash for Rachel Reeves.

UK graduates working in Germany and Belgium – and possibly other countries – have been told that their monthly repayments will increase from April, the Guardian can reveal.

In a move expected to further inflame a row over the crippling cost of student debt, the government was accused of employing “messed-up logic” in calculating living costs as many Britons abroad now face handing over hundreds of pounds more a year out of their pay.

Amid growing calls for reform of the system to ease the debt burden faced by millions of graduates, the government is turning the screw even tighter on some UK nationals living overseas by slashing the salary threshold for repaying loans.

The row over the cost of student loans has escalated since the chancellor’s decision last November to freeze the salary threshold for “plan 2” student loan repayments for three years.

But, the Guardian understands, for plan 2 graduates living in Germany, the UK government is going further and cutting the threshold from the current £28,470 a year – the same as in the UK now – to £23,510, with effect from 6 April.

Like their counterparts in the UK, those with plan 2 loans who live abroad have to repay 9% of everything they earn above their annual threshold.

The overseas salary thresholds are based on living costs in each country and set once a year – but some affected graduates said the cut suggested the UK government had decided that the cost of living in Germany had somehow fallen by nearly £5,000 between 2025-26 and 2026-27.

The move means the UK is imposing a threshold that is less than the annual amount a full-time worker on Germany’s minimum wage would earn: €28,116 (£24,500).

One graduate based in Germany claimed the move was designed to squeeze more money out of those living abroad and amounted to “a UK government disincentive to move to Europe”. On web forums, some said their monthly loan repayments would double, or almost double.

It is unclear precisely which countries have had their thresholds cut (or increased) and how many UK graduates are affected. The Department for Education declined to confirm how many people would be affected; it intends to formally announce the 2026-27 overseas earnings thresholds in April.

Reeves is under increasing pressure over the row, which centres on an estimated 5.8 million people who took out a plan 2 loan between 2012 and 2023, many of whom say they have been saddled with ballooning debts.

Some graduates claim they were the victims of government “mis-selling”, and the consumer champion Martin Lewis has told Reeves that changing the terms of the deal was not “a moral thing” to do.

There are 201,000 English UK nationals living overseas with student loans “in repayment”, according to official data, though some graduates from Wales and Scotland are also affected by the changes for those living overseas.

One UK national who graduated from Sheffield University after five years of study – a degree followed by a PhD – and now works in Germany, was told by the Student Loans Company (SLC) that his plan 2 loan repayments would increase from £213 to £251 a month – an extra £456 a year – even though his salary had not gone up.

A representative of the SLC, the government-owned organisation that administers the loans – told the graduate the annual repayment threshold for Germany was being cut to £23,510 a year from April, according to screenshots of his conversation seen by the Guardian.

The graduate said: “How can this be legal? The talk was of freezing, but this is a massive drop.”

On Reddit and MoneySavingExpert forums, other graduates in Germany and Belgium said they had also been informed the new threshold was £23,510.

One user posted: “It’s messed-up logic. Germany isn’t cheaper to live in, so they should raise the UK threshold, not reduce/reclassify Germany.” They have a plan 4 student loan – they studied in Scotland – and said their monthly repayments were being hiked from £84 to £127.

German inflation edged higher to reach 2.1% last month, data revealed this week, while UK inflation fell to 3% in January.

The SLC says the overseas earnings thresholds are based on living costs such as food, housing and transport, and are set using information published by the World Bank.

Asked about the new overseas thresholds, a government spokesperson said: “We inherited the student loans system, including plan 2, which was devised by the previous government.

“Threshold freezes [in the UK] have been introduced to protect taxpayers and students now, alongside future generations of learners and workers. The student finance system protects lower-earning graduates, with repayments determined by incomes and outstanding loans and interest being cancelled at the end of repayment terms.”

They added: “Since we were elected, we have been committed to supporting the aspiration of anyone who can and wants to attend higher education, including by reintroducing targeted maintenance grants to support the prime minister’s target of two-thirds of young people taking a gold standard apprenticeship, higher training or heading to university by the age of 25.”