Graduates overpay £23m on student loans

Latest figures published by the Student Loans Company have revealed that graduates have overpaid £23 million on their student loans.

The figures for 2019/20, showed that 54,516 graduates overpaid their student loans, because their payments didn’t stop once the debt was settled. The average overpayment was £424. In total £23.1 million was overpaid.

The average overpaid has dropped 30% in the past four years, and the number of people affected is down 38% after the Student Loans Company changed the system.

Commenting on the figures Sarah Coles, Personal Finance Analyst at Hargreaves Lansdown said  “Nobody enjoys repaying their student loan, so it’s particularly painful to learn that in 2019/20 55,000 people kept doing it even after the full debt had been settled.”

“On the one hand, student loan overpayment isn’t as rife as it was four years earlier, when more than 88,000 people overpaid an eye-watering £53.5 million. On the other hand, graduates are still handing over £23 million of their hard-earned cash that they don’t actually owe.”

“Part of the problem is that people took these loans out so long ago that their contact details may well have changed, so the protections the Student Loan Company introduced to avoid overpayments won’t help them at all. All the tips on avoiding overpayments will end up sitting on the mat of a house they used to live in, or clogging up the inbox of an email account they no longer use.”

“The same goes for their bank account. Any overpayments between £25 and £750 should be automatically refunded, but if the Student Loans Company has an old bank account on file, they can’t do this.”

“The other issue is that when someone has been repaying a debt for this long, they start to resent it, so they’re not inclined to open mail from the Student Loans Company or read their texts and emails. And if they get the one asking for full payment of the rest of the loan, they might be so cross they’re asking for it all at once, that the potential benefit pales into insignificance.”