The National Union of Students (NUS) today (Thursday) responded to reports this morning that the Government would drop proposals for early repayment penalties on student loans.

NUS said that the ongoing lack of clarity from minsters would create confusion for students, graduates and their families about whether early repayment of student loans made financial sense, and called on ministers to come clean about the risks and benefits associated with repaying early.

Liam Burns, NUS President said:

“Early repayment penalties ultimately risk making the student loans system more regressive, but the issue of whether they should be barred or encouraged is a smoke screen that obscures the truth about paying back earlier than required."

“Paying back early is rarely a rational decision for those who have saved money for college or have a little bit extra to spare and most would be better off investing it in an ISA than handing it to the Student Loans Company."

"Ministers must come clean on student finance to ensure those on low and middle incomes are not duped into chipping away at their outstanding debt even when it rarely makes financial sense to do so, particularly for those who are seeking to get on the housing ladder or start a family."

“In reality graduates shouldn't be able to repay early unless that repayment is over half of what is owed. That way debt adverse, low earning graduates won't be duped into throwing away capital earned early on in life when they might not have had to pay that amount at all."