On Wednesday, Rachel Reeves, Chancellor of the Exchequer, announced the Labour party’s new Autumn budget. She has pursued her priorities of cutting the cost of living, NHS waitlists and National debt, but has been met with fear and scepticism.
The labour manifesto was committed to not raising taxes, and although freezing tax brackets does not explicitly state that this is happening, it does mean that as wages rise, an increasing number of people will begin to fall into higher tax bands. This includes graduates and potentially those working alongside their studies. Many are voicing their concerns about this, but what else does this new budget mean for students and graduates?
Freezing student loan repayment thresholds:
Plan 2 students are those from England who started university between 2012 and 2022, and students from Wales who started university from 2012 and onwards.Their current lower interest rate threshold is currently £28,470, but will be increased to £29,385 in April 2026, and the higher interest rate threshold will increase £52,885. The threshold will then be frozen for 3 years from 2027-28 to 2030-31.
This has been justified in the budget document with the argument that “Graduates generally benefit from higher earnings, and ensuring that they repay more of their loan is fair to those workers who have not gone to university”.
Student loan repayments are not officially considered as a tax, but for those who have tuition fee and maintenance loans, they have a similar function. A sum of money is taken from graduates’ payslips each time, often with an unknown end date.
Maintenance grants:
Set to begin in the 2028 to 2029 academic year, the Labour government has re-introduced student maintenance grants.
The eligibility criteria consists of studying a higher education course in an eligible subject at levels 4,5 to 6, with at least 120 credits or more per course year, that will lead to a qualification under the LLE or full time under current student finance arrangements. As well as qualifying for means-tested maintenance loans from Student Finance England in each year of study.
If your household residual income is below the £25,000 threshold you can receive a maximum of £1,000 extra in your first or second year of university, and a maximum of £750 for students in their third year or above.
If your household residual income is below the slightly higher £30,000 threshold, you can receive a maximum of £500 extra per year in your first or second year of university, and a maximum of £375 per year extra in your third year or above.
The government has also committed to increasing maintenance loans every year in line with forecast inflation.
An international student levy, which imposes a fee of £925 per international student per year, is currently under consultation and will take effect from the 1st of August 2028. This levy is expected to fund the reintroduction of targeted maintenance grants.
Minimum wage increases:
Both the national minimum wage and national living wage will increase in April 2026 by more than the rate of inflation.
Workers aged 21 and over will have an hourly rate increase of 4.1% from £12.21 to £12.71, while those aged 18 to 20 will have an 8.5% hourly rate increase from £10.00 to £10.85.
In order to protect vulnerable workers, those who breach the national minimum wage rules will be met with fines.
Freezing railway prices:
For the first time in 30 years, rail fares in England won’t be increasing with inflation as prices are to be frozen next year. This applies to regulated fare, including season tickets and off-peak returns, until March 2027.
Freezing prescription prices:
England is the only UK nation that still implements charges for prescriptions. Until May 2026, these charges will be frozen for a second consecutive year, at a price of £9.90 per item. Those exempt from prescription payments will continue to receive free medication.
This move is expected to save patients £12million over the next year, in an attempt to provide relief from cost-of-living pressures.
Fuel duty:
Reeves’ announcement promised to prolong the freeze in fuel duty that was first introduced in 2013, and to continue the 5p cut in field duty that was implemented after Russia’s full-scale invasion of Ukraine. However, starting on the 1st September 2026, there will be 3 stages of reversal to these cuts, beginning with a 1p-per-litre increase, followed by a 2p-per-litre increase on the 1st of December 2026 and 1st of March 2027. These changes will impact commuting students who drive to class, and those who take their car to university during term-time.
The government will also be implementing rules which mandate petrol forecourts to share real-time rises in fuel prices. It is estimated that this rule change will save average households £40 per year.
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