They can either sign up to the direct debit scheme with the Student Loans Company, meaning that repayments stop at exactly the right time, or continue to repay through the tax system which may result in overpaying. If overpayment occurs they will be reimbursed by SLC at the end of the tax year, with interest. Latest figures show that of the 106,000 customers coming to the end of their loan 34,000 took up the offer to pay by direct debit or paid their loans off in full.

Kevin O'Connor head of repayment at the Student Loans Company said:

"Student loans are collected through the tax system, so by the time employers tell HMRC and HMRC tells the Student Loans Company how much of your loan you have paid through PAYE, you could have already paid more than you are due to.

"The most efficient way to repay your loan as you approach full repayment is through the direct debit scheme for the last two years of your loan. If you don't wish to pay by Direct Debit you can continue to pay through the tax system and be reimbursed when we receive the information from HMRC.

"Switching to Direct Debit means you can choose your monthly repayment date and we can make sure your repayments stop at exactly the right time," he added.

The Student Loans Company recommends that you:

• Keep track of your balance and repayments by logging on to www.studentloanrepayment.co.uk
• Check that you are within two years of completing your repayments - if so, we will ask you if you would like to switch to repaying by Direct Debit.

More than 40,050 customers chose to continue to pay through the tax system last year and were reimbursed by an average £557.

Further information: Rona Cameron/Breea Keenan - 0141 306 2120

Background

Student loans are collected through the tax system. This is because using the existing tax collection processes of HMRC was determined to be the fairest and most cost effective, both for customers and for UK taxpayers.

The Student Loans Company receives information about what customers have repaid from HMRC once a year once employers have sent in their tax returns. We cannot determine the amount repaid by borrowers until employers make their annual tax returns. The result is that there is a lag, and means some borrowers nearing the end of their repayments are likely to overpay.

All money overpaid is refunded with interest.

About the Student Loans Company

The Student Loans Company provides financial assistance for people who want to go to university or college, offering loans and non repayable grants for studying and living. The company provides loans for tuition fees, which are paid directly to the university and college.

We have more than 4 million customers, 1.1 million student customers and 2.9 million customers no longer in higher education.