Thousands of university graduates are set to receive refunds after their student loan balances were accidentally increased. The Student Loans Company (SLC) has uncovered two issues that have affected some plan 2 loans, which cover undergraduate courses that started between 2012 and 2022.
Two Errors Identified
The first error was a technical issue that meant the wrong income information was used when interest was calculated. The other was the result of an HMRC income reporting error that affected people who had income through both PAYE and self-assessment.
The mistakes have affected 71,000 people in total, including 41,000 people who have seen their student loan balance increase by mistake, and 30,000 who have seen theirs go down.
Refunds and Corrections
SLC says it will contact customers whose balance has increased due to these issues. If you have paid off more than you should have, you will receive a refund, or if you have already paid off your loan in full, you will not have to start repaying again.
SLC also confirmed that both errors have now been fixed and said any changes to your balance will be reflected in your next annual statement, which should be available before the end of September. It estimates that 1.3% of current plan 2 loans were impacted.
Apology from SLC and HMRC
An SLC spokesperson said: "We are contacting some Plan 2 customers to inform them we’re correcting their loan balance following technical issues which have now been resolved. Those customers affected do not need to take any action and regular repayment amounts will not change. SLC and HMRC are very sorry that this has happened."
Interest Rate Cap Announced
It comes after it was announced in April that interest rates on plan 2 and plan 3 student loans will be capped for the 2026/27 academic year. Plan 2 student loans are currently charged an interest rate of 6.2% while they study, based on the Retail Price Index (RPI) measure of inflation plus 3%. Once their course is finished, the interest rate then depends on how much they earn, with the highest earners being charged RPI plus up to 3%.
But from September, interest rates will now be capped at a maximum of 6%. It comes following widespread anger over graduates being stuck with ballooning debts. Many students say their student loan debt is growing every year despite them making regular repayments, due to the current interest rate terms that are attached to them.
