Student Loans are part of the government’s financial support package for students in higher education in the UK. They are available to help students meet their expenses while they are studying, and it is HMRC’s responsibility to collect repayments where the borrower is working in the UK. The Student Loans Company (SLC) is responsible for collecting the loans of borrowers outside the UK tax system.
Whilst many ex-students are happy to continue paying back their loans at the lowest level possible, it is of course an option to pay-off you student loan in full. This might be done for a number of different reasons that could include peace of mind by removing an ongoing debt repayment and reducing your monthly debt repayments. It is important to note that the interest rate payable on student loans varies and typically those started before 01 September 2012 pay lower rates.
Unlike many other debts, there are no penalties for clearing your student loan early so if you have other debts with significant penalties for making early repayments, this may be a good one to tackle first. However, if you have other debt with higher interest rates and no early repayment penalties then it might be more beneficial to tackle those debts first.
If you want to pay off your student loan you must first call the SLS to get an up-to-date settlement figure. If you have been making student loan repayments through your salary, then you should have your last P60 and all your payslips for the current financial year to hand when you call. This will allow the SLC to calculate an accurate figure for you.