No penalty for paying back student loan early

Thu, 16 Feb 2012

People in England who are able to pay back their student loan early will no longer be penalised for doing so.

Business secretary Vince Cable had considered implementing a penalty for those who cleared their arrears within 30 years of leaving higher education - a measure that could have cost graduates thousands of pounds.

However, these plans have now been scrapped following a consultation period, meaning no such charges - similar to the current system - will be brought about.

The proposed alteration, which would have seen the introduction of annual fees of around five per cent on payments above an agreed limit, was originally presented as a means to stop wealthier scholars from avoiding interest charges on their standard repayments. 

Research into the matter, however, suggested those earning in the region of £18,000 a year - as opposed to the rich - would be the ones making extra payments.

The news comes after Georgina Earle, director of Women in Debt, recently claimed parents in the UK are finding it increasingly difficult to offer student finance assistance to their offspring.
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