Thousands of college graduates are in line for reimbursement following an accidental increase in their student loan balances. The Student Loans Company (SLC) has identified two issues impacting some Plan 2 loans, which cover undergraduate programs starting from 2012 to 2022.
The first problem stemmed from a technical glitch leading to incorrect income data being used in interest calculations. The second issue arose from an HMRC income reporting error affecting individuals with income from both PAYE and self-assessment.
In total, approximately 71,000 individuals have been affected, with 41,000 experiencing an erroneous increase in their student loan balance and 30,000 witnessing a decrease. SLC has assured affected customers that they will be contacted regarding the balance corrections, with refunds issued to those who have overpaid.
If the balance decreased without an overpayment, adjustments will be made to reflect the accurate interest amount without a refund. For borrowers who have fully repaid their loans, there will be no requirement to start repayment again.
SLC has rectified both errors and stated that any balance modifications will be visible in the next annual statement, expected before September’s end. A mere 1.3% of current Plan 2 loans were impacted by these issues.
An SLC spokesperson expressed regret over the incidents, emphasizing that affected customers need not take any action, and regular repayment amounts will remain unaffected. This development follows the announcement in April that interest rates on Plan 2 and Plan 3 student loans will be capped for the 2026/27 academic year.
Currently, Plan 2 student loans accrue interest at a rate of 6.2% during studies, based on the Retail Price Index (RPI) plus 3%. Post-graduation, the interest rate depends on income, with higher earners facing RPI plus up to 3%.
Effective September, interest rates will be capped at a maximum of 6%, addressing concerns over escalating student debts faced by graduates. Many students have voiced frustration over their growing loan balances despite regular repayments, attributed to the existing interest rate terms.
For more news and exclusive offers, join our Money WhatsApp group or sign up for Mirror’s Money newsletter.