Advice & Hacks
Student Loan Repayments Are Changing This Year - Everything you Need To Know
The new system is to help people keep track of how much they owe.
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Student loan repayments can be one heck of a confusing process. Considering loans are with you for the marjority of your working life, it's about time the government changed the system to help with re-payments.
Apparently, around 83% of graduates with a Plan 2 loan won't pay off their Student Loan in full before it is cleared.
However, there are some people out there who have over-repayed by large amounts, showing there is a clear flaw in the current system.
In hopes of improving this, the Department for Education has announced plans to introduce a new online re-payment service - which could largely replace annual paper statements - for the Student Loans Company (SLC) later this year.
Currently, after a student finishes university, they typically receive a paper statement in the first April after they graduate.
There will still be an option to opt-in to receiving paper statements, but the new service will provide information online which will be regularly updated for easier access.
This new system is to help people keep track of how much they owe, how much they've paid and how much is left outstanding.
Gavin Williamson, Education Secretary, said: "Student Loans can remain part of graduates' lives for many years, so it's only right we do all we can to improve the system for them.
"These changes will make it easier for students to understand their balance, manage their loan and avoid over-repaying."
Although there are improvements being made to the system, Chris Skidmore, Universities Minister says graduates should consider using direct debits to pay the final repayments of their loan.
He said: "I urge all graduates to use this new service and to join the direct debit scheme as they approach the end of their loan to ensure a smooth end and not repay more than they should."
However, Jake Butler, student money expert at Save The Student, says although he is glad the government is addressing some of the confusion over student loan repayments, the new system isn't tackling the problem head on, arguing much more needs to be done.
He said: "We're glad that the issue of graduates over-repaying their loans is being addressed by the government, but it's disappointing that the new service doesn't seem to fully address the problems.
"Even with online updates, it's unrealistic to expect grads to keep track of their loan repayments for decades and make necessary changes themselves to avoid over-repaying their loan. The technology should be there to prevent it automatically.
"It's also frustrating that the government appear to be using this to assure the public they understand the issues with Student Finance. We're worried they're moving attention away from the real problem: the inadequate Maintenance Loans received by too many students.
"It is unfair to calculate Maintenance Loans based on assumptions that parents with certain incomes will financially support their children at uni. This isn't always the case, and this is one system that needs to change, urgently."
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