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 affecting certain plan 2 loans, which cover undergraduate programs between 2012 and 2022.
One issue was a technical glitch that led to incorrect income data being used for interest calculations. The other problem stemmed from an error in income reporting by HMRC, impacting individuals with income from both PAYE and self-assessment.
A total of 71,000 people have been impacted, with 41,000 seeing their loan balances rise erroneously and 30,000 experiencing decreases. SLC will reach out to those whose balances were inflated to arrange refunds for overpaid amounts.
For individuals whose balances decreased without overpayment, adjustments will be made for accurate interest calculations without refunds. Those who have fully repaid their loans will not be required to restart repayments.
SLC has rectified both errors and assured that upcoming annual statements, expected before September’s end, will reflect any balance adjustments. Approximately 1.3% of current plan 2 loans were affected.
An SLC spokesperson stated that affected customers need not take action, as regular repayment amounts will remain unchanged. SLC and HMRC expressed regret over the situation.
In related news, interest rates on plan 2 and plan 3 student loans for the 2026/27 academic year will be capped. Currently, plan 2 loans accrue a 6.2% interest rate based on the Retail Price Index (RPI) plus 3% during studies, with post-graduation rates linked to income.
Starting September, interest rates will be capped at 6%, addressing concerns about escalating student debt burdens. Many students have criticized the current interest rate terms for causing their loan debts to grow annually despite regular repayments.
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