/ Money

Student loan paid. Now they owe me money

I’ve reached the point that every graduate dreams of – I’ve paid off my student loan. But it worries me how much monitoring I’ve had to do to stay on top of it. Couldn’t the Student Loans Company be more helpful?

Firstly, I was very fortunate (and a little bit naive) to only have a student loan for two years. Before heading to university, I worked the duration of the summer to fund my first year. My parents helped me with my accommodation costs, and I managed to live for a year on the money I earned during those summer months.

Early student loan repayment

I didn’t understand the loan system when I went to university. I’ve always heard it was interest-free, but didn’t realise inflation would be added. I naively thought that if I borrowed £7,000 I’d have to pay £7,000 back. Oops.

I started paying back my loan for a year or so before I was earning enough to be forced to make the minimum repayment. I was only paying £20, but it felt like the sensible thing to do.

A few years in to my loan, I was shocked to see that my annual statement showed I was only paying off the interest on the loan and not the loan itself. To fix this, I again made small additional repayments to try and slice off some of the cost.

It really frightens me to think that it’s taken me seven years to repay £7,000. If I’d relied purely on the standard repayment advice provided by Student Loans Company, I’d probably still be a couple of years off.

Paying back what I borrowed

At the end of November I received a letter from the Student Loans Company predicting that I’d pay my loan off in the next two years. They were a little off the mark. By my calculations I was just two months away.

If I hadn’t called the company last week I would have paid an additional four months before their records alerted them to the fact I had already completed my payments.

I now have to submit my payslips from April of last year through to January in order to reclaim the one month I’ve overpaid. A simple auto-alert text or email would really help graduates keep on top of this themselves.

I’m not the only one in this position. In 2010, many graduates shared their overpayment frustrations on Which? Conversation, like Lorna:

‘I found out today that I have overpaid for over a year. This is a substantial part on my income… I am overdrawn nearly every month because I find it difficult to make ends meat living in London. I am absolutely outraged that they can do this, particularly in this financial climate. It amounts to stealing!’

Past, present and future

It’s such a relief to have dusted this off. It was a little depressing to think I was paying for my past (loan), present (mortgage) and future (pension) at the age of just 28!

To think it took me seven years with a lot of proactive payments, I can’t even begin to comprehend how long it will take today’s students to pay back their enormous loans. And the fact that they might be paying it back for longer than they actually need to makes it even worse.

Maybe you think I should be the one doing the chasing – I borrowed the money, it’s my responsibility to keep on top of it and pay it back on time. But there are flaws in the system that mean if you rely on the Student Loan Company’s annual update, chances are you’ll lose out.


Sorry for starting off with an off-topic comment, but I would like to congratulate Charlotte on what she has achieved. If others would spend some time working before going to university, they could avoid being in debt for many years after they graduate. Having a gap also allows young people to mature and decide how to get the best out of higher education.

It is a great pity that higher education saddles so many young people with debt. If university places were restricted to those who could demonstrate the motivation and ability, we could afford to fund their education. This country spends a fortune on university places for those that do little or no work, even if that is not their original intention. Many students are kicked out at the end of their first year, but the money could have been used to support motivated students.

Pete says:
25 May 2012

I think you have to really think about the amount of debt a traditional education can get you into, when there is a wealth of free educational resources already freely available – for example, this is a great list of free education videos I’ve used… http://voato.com/life/the-best-free-education-videos-and-lectures/

My daughter has over paid by about £2000 which amounts to paying more than 20% extra. And they are making it very difficult to claim it back. Requiring all sort of proof.