Graduates in the final two years of paying off their student debt can now choose the day their monthly loan repayment direct debit is taken from their account.

The Student Loans Company (SLC) writes to graduates (and anyone else paying off a student loan) when they are within 23 months of repaying their debt, inviting them to opt to pay the remainder by monthly direct debit to avoid any risk of them repaying too much.

Up until this point, student loan repayments are taken directly from your salary instead – and this remains the case if you don't choose to pay by direct debit. However, because the SLC only receives updates on what students owe from HM Revenue & Customs once a year, 100,000s have ended up repaying too much over the past few years.

To prevent this, for the past few years you've been able to set up a monthly direct debit for your last 23 months of repayments, so the SLC can ensure the correct amount is repaid. But graduates had no control over what day of the month this direct debit came out on.

Now those repaying their loan have the option to set the direct debit for any day between the 1st and 28th each month, so they can budget for the repayments better and sync them up with their salary if they wish.

For more on how student loan repayments work, see our Should I Repay My Student Loan? guide.

How do I choose the date I want the money to come out of my account?

When you are within 23 months of paying off your student loan, the SLC will write to inform you of this. It will recommend you set up a direct debit to avoid overpaying.

To do this, you'll need to call 0300 100 0611 to give your direct debit details and also say which day of the month you want the money to come from your account.

If you're already within your last 23 months and have a direct debit set up, you can call and set what date it'll be taken in future.

Why are so many people overpaying?

Student loan repayments are usually collected via the tax system – rather than direct from your bank account every month – and the SLC only receives an update on how much you've paid from HMRC once a year.

As a result, graduates who have actually finished paying off their loans may end up having money unnecessarily deducted from their pay packets because the SLC doesn't know they've finished paying them off.

Earlier this week HMRC's chief executive Jon Thompson told MPs that the taxman has the technology to pass on information more than once a year – or even feed it to the SLC in real time – but that it was uncertain if the SLC could handle the data.

An SLC spokesperson responded by saying: "HMRC and SLC are jointly exploring how to improve management of repayment information, including sharing repayment data more frequently to help reduce over-repayments."

In 2015/16 alone, 77,000 students were given a refund after overpaying their loan.

How to find out if you have overpaid and what to do about it

You should eventually receive a letter from the SLC informing you that you've overpaid and are owed money, but rather than waiting, you can call and ask, if you have payslips or your P60 from the past two years to hand.

If you receive a letter stating that you've overpaid your loan and are due a refund, phone the SLC customer service team and they'll verify your bank details and process the refund over the phone so you get the money back.

If you've called the SLC yourself to check if you're due a refund, you'll need to apply in writing (the address is Student Loans Company, 100 Bothwell Street, Glasgow G2 7JD). You should submit photocopies of your last P60 and payslips for the current financial year, along with your customer reference number and bank sort code and account number.

Once the SLC has processed your refund it will advise HMRC to notify your employer to stop student loan deductions. However, this can take a month, which may mean you have another one or two deductions taken. If this happens you should repeat the process above for a final refund.