Question to the Department for Education:

To ask the Secretary of State for Education, what assessment her Department has made of the potential merits of calculating student loan repayments on an annual basis to prevent overpayments.

Student loan repayments for borrowers resident in the UK are collected by HMRC through the UK tax system, which is an efficient approach that minimises the burden on borrowers. Employers deduct repayments each pay period for employees with a student loan when their earnings are above the relevant student loan repayment threshold for that pay period.

At the end of the tax year, a borrower with total earnings below the annual student loan repayment threshold may reclaim any repayments made where a pay period threshold was exceeded. A borrower will be able to apply for a refund of these repayments at the end of the tax year: https://www.gov.uk/repaying-your-student-loan/getting-a-refund. This offers additional protection to the lowest earning borrowers. Alternatively, they may decide not to apply for a refund, which will allow them to repay their loan more quickly.

For those borrowers who are close to fully repaying their student loan, the Student Loans Company provides borrowers with the option to switch to repayments via direct debit, which prevents over-repayments entirely.