Should You Pay Off Your Student Loan Early?

For most graduates, overpaying a student loan is a mistake. Because repayments depend on income and the balance is written off after decades, only high earners certain to repay the whole loan benefit from clearing it early.

Last reviewed: 30 May 2026 · 2 min read

Key Facts

Repayments are based on income, not your balance
Plan 5 loans are written off after 40 years
Only high earners who'll clear the loan benefit from overpaying

Why overpaying usually doesn't help

Your monthly repayment is 9% of income above the threshold — it doesn't change whether your balance is £20,000 or £60,000. So overpaying doesn't reduce your monthly cost; it just clears a debt that may have been written off anyway.

For a graduate on a modest or middling salary who'll never repay the full amount before write-off, every extra pound overpaid is money that would otherwise have vanished. That cash is almost always better kept for an emergency fund, a house deposit or a pension.

When it can make sense

Overpaying only pays off if you're confident you'll repay the entire loan before the write-off date. That typically means high earners on strong salary trajectories who would otherwise rack up years of interest.

Even then, it's worth comparing the loan's interest rate against what you could earn elsewhere. If a savings account pays more than your loan's interest, your money may work harder there.

FAQ

Frequently Asked Questions

Is it better to save or overpay my student loan? +

For most people, save. Because the loan may be written off and repayments don't depend on the balance, building an emergency fund or saving for a deposit usually beats overpaying. Only consider overpaying if you're a high earner certain to clear the whole loan before write-off.

Will overpaying my student loan boost my credit score? +

No. UK student loans aren't on your credit file, so overpaying has no effect on your credit score at all. If improving your credit is the goal, a credit-builder card paid off in full each month is far more effective.

Can I get a refund if I overpay my student loan? +

Yes, if you accidentally overpay — for example through deductions in months you were under the threshold — you can reclaim it from the Student Loans Company. Deliberate voluntary overpayments, however, can't usually be reversed, so think carefully before making them.

Topics covered

student loans overpaying repayments

This article is for informational purposes only and does not constitute financial advice. Always do your own research or speak to a qualified financial adviser before making financial decisions.