More than £18m of refunds for loan overpayments go unclaimed by graduates

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More than £18 million in student loan overpayments have been held by the UK government over the last five years.

Just under 60,000 graduates in England overpaid on their student loans since 2015-16 and are owed refunds, averaging more than £300 per person, according to Student Loans Company (SLC) data.

The figures, obtained by Research Professional News, show nearly £18.4 million of overpayments on student loans in England has not yet been refunded to graduates’ bank accounts.

The SLC said it has introduced a new online repayment service over the past two years to make it easier for customers to manage their student loans and help avoid overpayment.

The data – which was obtained under the Freedom of Information Act – shows that between 2015-16 and 2019-20 a total of £18,353,028 was not refunded.

The figures also show that, between these years, 58,950 people had not claimed their refunds.

Overpayments are made due to the way information used to be shared about loan repayments.

Historically, repayment information was only shared between HMRC and SLC once a year, at the end of the tax year in April, which meant some people continued to repay their loans after they had settled their bill.

Since April 2019, SLC and HMRC began sharing repayment information on a weekly basis.

Two years ago, Research Professional News first published data on the value of overpayments that had not been refunded.

At that time, the equivalent figure – the total owed for the five most recent years – was £21.6 million, which is £3.2 million higher than the latest figures, which suggests there has been some improvement in refunds.

But in 2019-20, a total of £2,086,928 was still not refunded – although the amount owed to each person on average is relatively low at £78.

Two years ago, the figures showed there were £6.3 million of un-refunded overpayments made in the year 2015-16. This year’s data show that £5.1 million – or 81% -of that money remains unclaimed.

In a statement to Research Professional News, an SLC spokesperson said: “Over the past two years, SLC has introduced a new online repayment service to make it easier for customers to manage their student loan and to help avoid over-repayment.

“These improvements have resulted in a 38% drop in the amount over-repaid since 2018.

“Customers can avoid over-repayment by opting to pay their student loan by direct debit during the last two years of repayment.

“We contact every customer two years prior to the end of their loan and urge them to switch their repayments to direct debit during this period.

“In addition, we now automatically refund customers and last year we automatically refunded £3.5 million, but we can only do so if we hold up-to-date contact information.”



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