The Student Loans Company is sitting on more than £18m in overpayments made by graduates and other former students since 2015, two years after its mountain of unclaimed refunds was first disclosed.
Figures obtained through freedom of information requests show that the SLC, which administers government-backed loans for tuition and maintenance, has £18.3m in overpayments awaiting refund to nearly 60,000 former students from 2015 to 2020.
The total includes £2m in unnecessary payments made in 2019-20, despite the SLC making administrative changes to reduce overpayments by graduates who had settled their outstanding debt.
The £18.3m total is less than the £21m in overpayments since 2015 revealed in figures published by Research Professional News two years ago, but suggests the SLC is unable to locate and refund many of the former students to whom its owes an average of £300 over that period.
Overpayments totalling £6.3m made in 2015-16 alone were held by the SLC two years ago, but the latest figures show that more than £5m has still not been refunded.
Income-contingent student loans are repaid by salaried graduates through the payroll tax system administered by HMRC. The bulk of overpayments arose because HMRC and the SLC exchanged data only once a year, but recently the organisations have shared data once a week to reduce the chances of overpayments.
The SLC said it could not make refunds if former students did not supply their correct contact details.
A spokesman for the SLC said: “Customers can avoid over-repayment by opting to pay their student loan by direct debit during the last two years of repayment. We contact every customer two years prior to the end of their loan and urge them to switch their repayments to direct debit during this period.
“In addition, we now automatically refund customers and last year we automatically refunded £3.5m, but we can only do so if we hold up-to-date contact information.”
Rachel Hewitt, director of policy and advocacy at the Higher Education Policy Institute, told PA Media that the responsibility should not fall on graduates to avoid overpayment.
“It is unethical for the loan recipients to have to take the responsibility for ensuring they are not overpaying, and shows flaws in the system that there is still such a significant number of graduates overpaying. It is essential that this is addressed, to avoid further distrust in the loans system.”
Last year the SLC enabled repayments to be made online for the first time but its initial website was attacked by Martin Lewis, the consumer finance champion, for giving graduates a “demoralising, damaging and dangerous” picture of their debt.
Read the full article here: https://www.theguardian.com/money/2021/may/05/student-loans-company-holds-overpayments
