Student Loans Company forced to refund millions after overcharging graduates
The Student Loans Company has had to refund 300,000 students a total of £225 million in overcharges following what's being dubbed a “colossal blunder”.
Over the last five years, the Student Loans Company has had to refund thousands of students after accidentally overcharging them for their student loan repayments, it’s been revealed.
Thanks to figures released following a Freedom of Information request by the Labour Party, we’ve learned that the number of graduates being reimbursed for overpayment has risen 50% since 2011.
In the last year alone, as much as £53 million was repaid to 77,000 graduates, and the average refund that students received was £690! To think what that money could be spent on...
So, it's clear that the situation isn't getting any better. But why are graduates being overcharged in the first place, and what's being done to fix this?
Why are graduates being overcharged?
The reason for this "colossal blunder" has been attributed to the fact that the Student Loans Company use the tax system to calculate how much graduates should be forking out in repayments each month.
However, the HMRC only update the SLC once a year, and since a graduate’s employment situation and earnings can change a helluva lot within a one-year period, often the information sent to the SLC doesn’t contain the whole picture.
If you were to lose your job, for instance, or get a new job but with a slightly lower salary which happens to fall below the £21,000 repayment threshold, it’s likely you’ll still have to continue with repayments until the HMRC updates the SLC – which could take anything from weeks to a year to rectify.
The system that the SLC use to process applications and repayments is also notoriously inefficient and outdated.
Earlier this year, we reported that SLC were given £139 million by the government in order to digitalise the entire loans system precisely to avoid blunders such as this one, but the project was unexpectedly abandoned and £50 million of taxpayers’ money disappeared in the process.
What the SLC have to say
A spokes person for the Student Loans Company has said:
If we find out that a borrower has overpaid, we will get in touch with them using the latest contact information they have on their account. This will allow us to provide a refund promptly. There are various ways to keep a check on repayments.
However, Labour MP Wes Streeting has revealed on twitter that he spent six months chasing up the SLC for his money when he was overcharged.
They don't do it promptly either. I had to ring several times over 6 months to get this addressed. https://t.co/SuO9LWNIG6
— Wes Streeting MP (@wesstreeting) October 25, 2016
Which begs the questions: If an MP struggled to get anywhere with this, what chance does the average graduate have in claiming back their cash?
What do do if you think you're being overcharged
Reckon (or hope!) you might be one of the 300,000 students who've been overcharged on their student loan repayments? Check out our Big fat guide to student finance to make sure you have all the facts.
If the repayment figures on your pay cheque still don't look right to you, head over to the SLC website and check that your contact details are up to date. If these are incorrect, there's a chance they've been trying to get in touch.
If your contact details are good to go, pick up the phone and get some answers!