United Kingdom

Student loan over-payments of more than £28M are waiting to be reclaimed by graduates

More than £28million in studentloan over-payments is sitting in government coffers because it has yet to be reclaimed by graduates.

Due to a complicated tax system, most students make extra repayments after their debt is cleared as the money is automatically debited from their monthly pay.

Student Loans Company (SLC) data shows that, in a nine-year period, more than half a million former students in England paid nearly £600 more than they owed. 

While much of this £308million overpaid has been redeemed by graduates, almost a tenth of this figure – £28.5 million – has not.

Over nine years more than half a million former students in England paid nearly £600 more than they owed on their student loans and are owed £28million (file picture)

The figures, obtained by Research Professional News, may raise fears that people are unaware they are owed the money.

However, the SLC said they contact everyone who overpays to arrange refunds from HMRC, and a government spokesman said steps have been taken to avoid over-payments occurring in the future.  

The data shows that between 2009/10 and 2017/18, a total of £307,821,092 was overpaid.  

The figures also show that between these years, 513,134 people in total had overpaid, and the average repayment was £597.

SLC, logo pictured, said they contact those who overpay to arrange refunds from HMRC

Over-payments are made due to the way information is shared about loan repayments. Traditionally, SLC has received repayment information once a year, at the end of the tax year in April.

This means that if, a graduate repaid their loans during the tax year, for example in November, they will have been making over-payments for the rest of that tax year.

An SLC spokesman said: 'We want all customers to repay the right amount and not to over-repay on their loan.'

The company writes to those in the last two years of their repayments suggesting they can pay by direct debit rather than through their employer to help prevent over-repayments, he said.

He added: 'We pro-actively contact all customers that have over-repaid to make arrangements for a refund; customers who do not participate in the direct debit scheme can also claim a refund at any time by contacting us.

'We urge all customers to keep their contact details up-to-date so that we can contact them at the appropriate time about the direct debit scheme.'

Over-payments are made due to the way information is shared about loan repayments. In April the law was changed to allow weekly data sharing between HMRC and SLC (file picture)

The spokesman also said that to improve its repayment system, the SLC has started to receive payment information from HMRC that will 'help to prevent customers from over repaying and provide them with more up-to-date information about their loan repayment'.

A Government spokesman said steps have been taken to help avoid over-payments happening in the future.

'This included changing the law in April to allow weekly data sharing between HMRC and the Student Loans Company, which will help to prevent graduates repaying too much,' he said.

'If a borrower believes there has been an over repayment, they should contact the SLC to seek a refund.'

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