The Cash Saving Consultants warns until you could have a excessive sufficient wage to clear your loans inside the 30 yr timeframe, rising your repayments is futile
Most graduates are losing cash by overpaying pupil loans (Picture: getty)
An enormous variety of graduates have “thrown away” cash by making an attempt to pay again their pupil loans faster, warned private finance guru Martin Lewis. The Cash Saving Skilled says most debtors will fail to cleat their loans inside the 30 years earlier than they wipe, so any overpayments will successfully be “flushed” away by not decreasing the quantity they must fork out over future years.
Newest official figures revealed £558million was paid in further repayments final yr – a report £10.7million every week – as debtors attempt to beat hovering rates of interest that may push money owed increased month after month. The statistics confirmed a report 94,819 individuals made voluntary funds in 2025/26, and the full quantity voluntarily repaid has surged by greater than 150% in 5 years, up from £218million in 2020/21.
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Learn extra: Martin Lewis warning over ‘actually huge drawback’ for {couples}
Cash Saving Skilled Martin Lewis on ITV (Picture: ITV)
The common borrower making overpayments is now handing over £5,892 a yr on prime of the necessary deductions that could be plucked out of their wages.
Many are doing so in a bid to flee what critics describe as a pupil mortgage “lure”, the place excessive curiosity prices can see money owed develop even whereas repayments are being made.
However monetary consultants concern some graduates could have paid only a fraction of their debt which means the funds will make no distinction to the quantity taken out of their month-to-month pay cheques.
Throughout the final 5 years, debtors have voluntarily repaid greater than £2.3billion in an effort to cut back their balances extra rapidly.
Beneath the Plan 2 system, graduates repay 9% of earnings above £27,295 a yr, with deductions taken mechanically by way of the tax system.
Curiosity is then added to the mortgage and it rises with revenue – from inflation (RPI) for decrease earners as much as RPI plus 3% for increased earners.
Critics say this construction means some debtors can see the full quantity they owe enhance regardless of making month-to-month repayments, prompting many to overpay in a bid to get forward.
Pupil mortgage overpayments (Picture: PA)
Campaigners warned the figures level to a rising divide between graduates who can afford to overpay and escape the system, and people who stay locked into a long time of repayments.
Mr Lewis, founding father of MoneySavingExpert, fears many individuals have been “panicked into overpaying” and for many debtors it will be cash “flushed” away.
He mentioned: “The truth that they’ve paid off £1,000 or £2,000 is not going to be sufficient to alter the truth that they will not clear the mortgage inside the 30 years earlier than it wipes.
“And meaning they won’t pay a penny much less in future as a result of they overpaid by £1,000 or £2,000. That cash has been thrown away.
“The upper revenue you could have, the extra prone to clear inside the 30 years and the extra possible due to this fact overpaying turns into realistically useful for you.”
Tom Allingham, pupil loans knowledgeable at Save the Pupil, added: “Whereas it would make sense for some graduates to make voluntary repayments on their pupil loans, for a lot of extra it will not be a smart monetary transfer.
“Except you are very assured you may finally repay in full, have a major sum of cash accessible and do not produce other monetary targets to fund (like a deposit or different money owed), repaying your mortgage early will not be the very best use of your cash.”
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