Thousands of college graduates are in line for reimbursements following an accidental increase in their student loan balances. The Student Loans Company (SLC) has identified two issues impacting some plan 2 loans, covering undergrad programs from 2012 to 2022.
One issue stemmed from a technical glitch that led to incorrect income data being used for interest calculations. The other problem arose from an HMRC income reporting error affecting individuals with income from both PAYE and self-assessment.
In total, these errors have impacted 71,000 individuals, with 41,000 experiencing an erroneous loan balance increase and 30,000 seeing a decrease. SLC will reach out to those affected by balance increases to issue refunds for overpayments.
For those whose balances decreased without overpaying, adjustments will be made for accurate interest without refunds. Customers who have fully repaid their loans will not be required to restart repayments. SLC has rectified both errors, with changes reflecting on the next annual statement by September’s end. Approximately 1.3% of current plan 2 loans were affected.
An SLC spokesperson assured affected customers that corrective actions are underway without requiring any steps from them, and repayment amounts remain unaffected. SLC and HMRC expressed regret over the situation.
Interest rate caps for plan 2 and plan 3 student loans for the 2026/27 academic year were announced in April. Currently, plan 2 loans have a 6.2% interest rate during studies, based on the Retail Price Index (RPI) plus 3%. Post-graduation, interest rates depend on income, with high earners facing RPI plus up to 3%.
Beginning September, interest rates will be capped at 6%, addressing concerns about escalating debts for graduates. Many students have expressed frustration over increasing student loan balances despite regular repayments due to existing interest rate terms.
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