Student loan overpayments increase by a fifth

New data from the Student Loans Company (SLC) has found that 52,000 students overpaid by £20.35 million with overpayments, surging by a fifth.

In 2021/22, the total overpaid in student loans was up 19% to £20,354,089 with the number of graduates overpaying their student loans surging 15% to 52,187. The average overpayment rose to £390.

SLC says the increase resulted from pandemic working arrangements which meant the company stopped contacting borrowers about overpayments.

Sarah Coles, Head of Personal Finance at Hargreaves Lansdown said “In 2021/22 graduates overpaid a jaw-dropping £20 million in student loans – up a fifth from a year earlier. It was a horrible reversal, after years of falling overpayments, and meant graduates needlessly forked out hundreds of pounds at a time when their finances were under real pressure. Fortunately, it was a blip, and these figures are set to fall again. But it’s worth taking steps to protect yourself from paying too much.”

“The spike in overpayments was the result of Student Loans Company staff remote-working during the pandemic. In order to focus on loan payments, they stopped two key communications for a period. They didn’t get in touch to let people know they were in credit, and they didn’t send people nearing the end of their loan term details of how to avoid overpaying. It meant over 52,000 people accidentally overpaid. Fortunately this is expected to be an outlier. In the current financial year, it looks like overpayments have fallen significantly, and are set to hit an all-time low. And while it’s miserable for anyone to pay more than they have to, it’s a long way from the bad old days in 2015/16, when we overpaid more than two and a half times as much – more than £53 million.”