Student Loans Company sets new record for excess loan repayments

THE STUDENT Loans Company (SLC) collected £36.5m more than it should have done from graduates last year, with tens of thousands of people now being advised to apply for refunds.

Over 63,000 graduates had repayments deducted from their wages despite having already paid off their loans, with the average graduate having £577 retaken incorrectly.

The number of people overpaying has increased year on year, from almost £16m in 2007-08, to £19m in 2008-09 and £22m in 2009-10.

Pete Mercer, vice-president of the National Union of Students, blamed the scandal on a lack of communication between the SLC and HM Revenue & Customs (HMRC), saying that ”The huge overpayments we’re seeing annually on student loans demonstrate that a switch to real-time communication between the Student Loans Company and HMRC cannot come soon enough.”

The SLC has been hit with embarrassment after embarrassment, with both it’s chief executive and chairman forced to resign in 2010 following repeated criticism of delays in processing applications for financial support, and the revelation that the replacement chief executive, Ed Lester, was being paid through a private company, avoiding tens of thousands of pounds in tax.

The SLC blames the problems on graduates and HMRC, as the taxman only tells SLC how much has been paid by each borrower once a year in April. This means that the graduates who pay off their loans after April in each year won’t have the repayments stopped automatically until the following April.

Kevin O’Connor, SLC head of repayment said: ”We contact all graduate customers who are identified as likely to overpay their loans and advise them of their options coming towards the end of their repayment. They can choose to take up our direct debit scheme or make arrangements to pay their loan balance.”

Graduates have the option to pay instalments by direct debit in the last two years of their loan, reducing the risk of overpayment. But of 151,000 people eligible to pay in this way, only 60,000 do so. The SLC insist that all over-repayments are refunded with interest, but graduates are still responsible for noticing overpayments and demanding their money back.