Graduates will no longer waste money making further payments on student loans they have already paid back, Budget papers revealed today.
Many university leavers who repay their student loans through their salary currently end up paying extra despite them being paid off, because of tardy tax updates – and then later have to reclaim the money.
At the moment, the Student Loans Company (SLC) only receives updates on what students owe from HM Revenue & Customs once a year – the out-of-date information has then left 100,000s out of pocket repaying too much.
By April 2019, a new system introduced by both parties will instead see loan repayments automatically stop once borrowers have fully repaid their loans.
How many university leavers are overpaying on their student loans?
In 2015/16, 86,000 people with a student loan overpaid. The average overpayment per graduate was £592.
What can I do to stop overpaying before 2019?
Before April 2019, you can avoid overpaying your student loan by opting to finish your repayments by direct debit, as we reported in our MSE News story in September.
The 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.
To do this, you'll need to call 0300 100 0611 to give your details and say which day of the month you want the money to come from your account.