Thousands of college graduates are in line to get refunds as their student loan balances were mistakenly altered. The Student Loans Company (SLC) has identified two issues impacting certain plan 2 loans, which cover undergraduate programs commencing between 2012 and 2022.
One problem stemmed from a technical glitch that led to incorrect income data being used for interest calculations. The other issue arose from an HMRC income reporting error affecting individuals with income from both PAYE and self-assessment sources.
Approximately 71,000 individuals have been affected, with 41,000 seeing an erroneous increase in their student loan balance and 30,000 observing a decrease. SLC has assured affected customers that they will be contacted, and those who overpaid will receive refunds.
For those whose balances decreased without overpayment, adjustments will be made to their accounts with the accurate interest rate. If the loan has been fully repaid, no additional repayments will be required.
SLC has rectified both errors and assured that any balance modifications will be reflected in the next annual statement, expected before the end of September. It is estimated that 1.3% of existing plan 2 loans were impacted.
An SLC representative stated, “We are reaching out to some Plan 2 customers to rectify their loan balance following resolved technical issues. Affected customers are not required to take any action, and regular repayment amounts will remain unchanged. SLC and HMRC express regret for the inconvenience caused.”
In related news, interest rate caps on plan 2 and plan 3 student loans for the 2026/27 academic year have been announced, aiming to address concerns about escalating debts. Currently, plan 2 student loans incur a 6.2% interest rate during studies, based on the Retail Price Index (RPI) plus 3%. Post-graduation, interest rates are income-dependent, with top earners subject to RPI plus up to 3%.
Starting September, interest rates will be capped at a maximum of 6%, addressing criticisms of growing student loan debts despite regular repayments due to existing interest rate conditions.
