It has often been difficult for student loan borrowers to avoid over repaying their student loan as the loan term neared its end. This is because of the time delay between employers making deductions from salary each month and submitting an annual return with detail of repayments. A new initiative to help PAYE borrowers avoid this was introduced by the Student Loans Company (SLC) on 14 December 2009.
In the last 23 months of repayment PAYE student loan borrowers can opt out of PAYE student loan deductions and go on to a Direct Debit arrangement. Doing this means a borrower will not over repay. The SLC will try to contact borrowers shortly before this time to offer and arrange this option. However if a borrower is aware that they are reaching this point they can contact the SLC direct and arrange to repay the balance of their loan in this way. Contact details can be found on the
SLC repayment website.
The form P46 wording will be amended so that only those borrowers who need to repay through their earnings, and who are not part of a direct debit arrangement, will tick the student loan box. Updated online versions of the newly worded P46 will be available from the end of January 2010 with paper copies being made available from July 2010. The handling of these forms by employers will not change.
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