The government is to change the student loans repayment system to prevent graduates from being overcharged after they have paid off their student loan.
At present, former students who fully repay their loan in the middle of the tax year continue to be charged until the end of the tax year.
While they can reclaim the overpayment back once the tax year has ended, the current system can leave graduates temporarily out of pocket.
However, it has been announced in today’s Budget that this problem will be rectified from April 2019, once HMRC and the Student Loans Company have updated their systems.
From this point onwards, payments will stop being deducted from a borrower’s salary as soon as the loan has been fully repaid.
“The government will tackle the problem of graduates overpaying their student loans,” the Budget statement says. It adds: “The Student Loans Company and HMRC will update their processes by April 2019, in order to share data more frequently and stop payments after a borrower has fully repaid.”
Other than this, there was little of note for students and graduates in Chancellor Philip Hammond’s Budget. An increase in the loan repayment threshold for post-2012 students was previously announced at the Conservative party conference in October.