/ Money

Does the Student Loans Company owe you money?

Student depressed looking at bills

Something’s gone horribly wrong with student loans. We’ve found that 57,000 former students are waiting for refunds worth £15 million. All because the Student Loans Company and HMRC can’t communicate.

The amount owed to ex-students came to light after Which? heard from several disgruntled graduates.

They found that payments were still being taken from their accounts even though they had already faithfully repaid all the money they owed.

A confusing and inadequate system

It seems the problem is that the repayments system is woefully inadequate. Here’s how it works:

Sounds simple, right? Nah, not a bit of it. HMRC and SLC don’t co-ordinate their records until the end of the financial year. At this time they compare notes and if the loan has been repaid, SLC kindly tells HMRC to stop taking payments.

Of course, if you still owe some money – even one month’s worth of instalments – SLC gives the green light for HMRC to continue processing payments for the rest of the new financial year – unless they are told otherwise. This means your account could continue to be debited for another 11 months after you completed your repayments.

Detriment, what detriment?

SLC maintains that overpayments aren’t a problem because you’ll get your money back at the end of the next financial year, so borrowers suffer no financial disadvantage. But that’s rubbish.

Most people who are paying off student loans aren’t wealthy. So it’s possible that the extra overpayments do put them in a tight spot, such as when their rent increases or, heaven forbid, when Christmas is looming. They may end up taking out credit cards or loans, which each come with their own costs.

Given all the furore surrounding tuition fees, the already sizeable level of student debt is only going to rise, leaving more ex-students paying off even more and for longer. Surely it’s time for SLC and HMRC to get their acts together?

Philip Cowan says:
5 January 2011

Thanks for highlighting this issue. My student loan was paid off a year or so ago but I was not informed of this by the Student Loan Company until recently. However, even now it continues to take money directly from my wages (last payment made in December 2010).

I only found out about this when I changed jobs and, even though money was still being taken paid, SLC sent a sniffy letter demanding to know my new employee details. When I finally got through to them by telephone, they informed me of my overpayments.

Some of the money has been repaid (amounts due from December 2009 to March 2010), but I have had to submit evidence of payments since April 2010 to get back my own money (bizarre but true) — and I am still waiting for this to be processed.

Furthermore, SLC is STILL taking money from wages, even though I called them again to tell them to please stop.

Two small asides to this tale: my bank has charged me more than £100 in overdraft fees and my mobile phone company has charged me a huge amount to call the SLC customer services number.

It seems like such a battle just to stay on top of these companies and make sure they are not robbing us.

Russell Drew says:
9 February 2015

I am disgusted with the fact that I paid off my student loan last march, yet the HMRC continue to deduct £42/month from my pittance of a wage.
I have told the SLC 2 months ago that I was aware my Student loan had been cleared in March 2014, they clearly are abetting the HMRC in order to extort more money from me.
Like the HMRC I should be allowed to charge the £100 fee for failing to be timely with tax returns and as a penalty for taking money that is not owed to them, in other words theft, like them I should be able to charge a daily fee.
Sooner or later, HMRC and Student Loans Company would be able to communicate.
How stupid are these people? and how stupid do they think we are?
Oh and why is the SLC in Glasgow…..they don’t even pay for their education. The rest of us are paying for them I suppose.

Stephen Jamieson says:
27 February 2011

I can only add to the frustration expressed by this article.

Despite repeated attempts over a 5 month period to stop the automated salary deductions, SLC seem to STILL be incapable of contacting HMRC to issue a ‘stop command’!

Yet another month goes by and another large slice of my earnings vanishes into this inexplicable government black hole!

I have at least 2 colleagues who are in exactly the same situation.

The most frustrating part is that there appears to be no path for escalation or accountable authority in which to challenge.

Can anyone shed some light on whether anyone is taking any notice of the scandal that is the SLC?!

Chris says:
6 April 2011

These people are theives, not only have they been silently charging me without ever sending me a statement, now they owe me money aparently I have to get copies of all of my payslips and send it to them as they dont know how to use a calculator to add up when it was paid off then subtract the additional. Idiots and theives.

lorna says:
30 March 2011

I found out today that I have overpaid for over a year (£170/month) this is a substancial part on my income…I am overdrawn nearly every month because I find it diffiuclt to make ends meat living in London, this money would have gone a long way to making my monthy wage go a lot further. I am absolutley outraged that they can do this, particulary in this finacial climate. It amounts to stealing!

Al says:
6 May 2011

I notified SLC that I had finished paying my student loan in February (Calculated from my statement and pay slips) They said they would inform HMRC and they would stop. In March they took another payement. I rang SLC again they said it can take up to 28 days to stop. So in April, when they took another payment I was not happy!
They now have taken over £600 extra!
Still waiting for it to be repayed!

David says:
31 May 2016

You can’t wait, they will just keep it, I was told on the phone today. You have to ring them they tell you the figure but then you have to prove it by sending them paperwork!

tashalouiza says:
25 May 2011

I paid off my student loan in August. Despite eleven letters (and counting), we are now in a new financial year and those thieves are still taking deductions through PAYE. They have repaid £651 stolen during August – November, and still owe me £1600. I am on a reasonable salary, but losing this amount of money every month really is not reasonable: it is equivalent to the cost of maintaining, taxing, insuring and fuelling our car, and paying for my monthly tube ticket!