Tens of thousands of students have been left out of pocket by an average of £580 due to the Student Loans Company (SLC) overcharging them.
Outdated systems which are “not fit for purpose” were attributed to causing the overpayments, which have risen from 2012-13. Back then, 70,600 students were overcharged, worth £41.4m, whilst in 2013-14 it was £45.4m from 78,000.
Baker Tilly, an accountancy firm, obtained these figures after making a Freedom of Information request.
The tax system collects student loans repayments for “income-contingent repayment” loans, and when graduates have finished repaying, the SLC is meant to inform HMRC by sending a “stop notification”. This information is then meant to be passed on to employers who stop taking payments out of their employees’ wages.
However, there is a time lag which causes many to overpay, due to the SLC only receiving information about how much students have repaid once a year, after employers have already finalised their tax returns. It is then likely that the graduates face more obstacles and delays as they attempt to secure a refund.
“For some people, monthly student loan deductions area significant proportion of their income, and these overpayments could be causing real financial hardship,” said Lesley Fidler of Baker Tilly. “These latest figures show that the problem is getting worse rather than better.”
This may be causing tens of thousands of students to use payday loans, as they struggle to make ends meet.
