Plans to impose penalties on students in England who pay off university loans early are to be abandoned, ministers are expected to announce.
Business Secretary Vince Cable had intended to introduce an early repayment penalty.
It could have cost graduates thousands of pounds if they cleared their debts within 30 years of leaving university.
However, following a consultation it is understood the government has decided not to introduce the scheme.
The consultation applied only to student loans in England.
Early repayments are allowed, without penalties, under the current system.
The business secretary is believed to have supported the introduction of an early repayment penalty as the Liberal Democrats and Conservatives sought to reach agreement on raising student tuition fees as part of the coalition agreement.
The coalition government had said the system would be "progressive".
Ministers were considering introducing annual charges of around 5% on payments above a certain limit to prevent wealthier students avoiding interest charges on the new standard 30-year repayment plans.
'Debt aversion'The new system, if agreed, would have come into force this year when tuition fees will increase to up to �9,000 annually.
But following the consultation process, the government decided the evidence suggests that those most likely to make extra payments were not the wealthy but those earning around �18,000.
Ministers were concerned it would mean thousands of students could end up losing out and the government is expected to announce within the coming weeks that there will now be no penalty for early repayment of loans.
Last year think tank CentreForum, which describes itself as liberal, said the plans would be ineffective and costly, arguing that most of those who overpay do so because of debt aversion, not because they are wealthy.
Scottish home students do not have to pay tuition fees, while Northern Ireland's government has said fees will not rise for the next four years.
The Welsh Assembly has announced that fees will rise to up to �9,000, as in England, but the government will meet the extra cost to Welsh students studying at any UK university.
Source: http://www.bbc.co.uk/go/rss/int/news/-/news/education-17053581
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