Thank goodness the Government has seen sense and has removed the threat of early repayment penalties for those seeking to clear their student loans early.

When the Government devised the new student loans scheme that starts this autumn it did two things: it greatly increased the fees students would have to pay to receive a university education, and it changed the repayment system to create a sort of "graduate tax". The more a student earns after graduation, the higher the rate of interest they pay. But if a student never earns enough to clear the debt, it is eventually wiped out after 30 years.

To avoid wealthy students taking out loans at a rate of interest lower than could be obtained in the commercial market, investing the money and then paying it back immediately on graduation, turning a profit, it was proposed that early repayment would incur a penalty of 5% of the amount repaid. It is this proposed penalty that has been abandoned.

While in theory an early repayment penalty sounds fair enough, it should recalled that the wealthiest students probably won't borrow from the Student Loans Company anyway. The number of those "playing the system" would be unquantifiable and probably very limited, and the main effect of an early repayment penalty would be to hit the "squeezed middle" once again.

The very idea of taxing learning is abhorrent. While it has to be recognised that something needed to be done to fund the unversities in a time of economic stringency, penalising the successful while giving those who never do a day's work after graduation a free ride and the less successful a cheap one (no payments are due unless you earn at least £21,000, and the debt eventually gets written off) seems highly perverse.

The reprieve for early repayment now raises new problems for graduates - not least whether to take advantage of it. If a graduate's lifetime earnings level means they will be excused some of it by the time the 30-year write-off period arrives, then making extra payments would be stupid.

The scheme simply deducts 9% of your earnings over £21,000 until the debt is repaid or written off. It doesn't work like a mortgage, where the repayment term is shorter or you pay less by way of interest if you make early repayments.

As some estimates reckon that "most" graduates will never repay their debt in full, anyone considering making an lump sum repayment of their student loan certainly needs to keep this in mind.

However, for those whose earnings mean they will easily repay their loan in full, the idea of keeping these people in some kind of debt servitude is, I believe, immoral. It was debt that got this country into the mess it is in now. Encouraging it and institutionalising it is this Government's shame.

Of course, the Government won't have failed to notice that early repayments could be a welcome boost to Treasury coffers, and that some graduates will be caught out, and by repaying early will pay more than they would have done it they had submitted to the system and then had some of their debt written off. Every cloud has a silver lining.