At least ten graduates are owed more than £15,000 each in student loan overpayments, with one individual overpaying by nearly £50,000, according to newly released figures.
The data, obtained by Research Professional News under the Freedom of Information Act, reveals that some former students in England overpaid their loans more than five years ago but have yet to claim refunds. The Student Loans Company (SLC) confirmed that three other graduates have also overpaid by more than £20,000.
Why are graduates owed thousands?
Historically, the SLC received student loan repayment information from HM Revenue and Customs (HMRC) only once a year. This delay meant that some individuals continued making repayments even after clearing their balance. As a result, they unknowingly overpaid their student loans.
Since April 2019, however, HMRC has been providing weekly updates to the SLC, which has significantly reduced the risk of overpayment. Despite this improvement, thousands of pounds remain unclaimed by graduates who overpaid before this system change.
The average amount owed to those who overpaid in the 2022-23 financial year was £406, according to the SLC. However, some high-earning individuals have not responded to refund requests, meaning they are yet to reclaim substantial sums.
Lack of response from affected graduates
The SLC has stated that it has repeatedly contacted those with “exceptional credit balances” – significant sums owed due to overpayments. However, some individuals have either not responded to communications or chosen not to request a refund at this time.
An SLC spokesperson said:
“The exceptional credit balances are the result of payments received from high-earning individual customers. In most cases, when a customer fully repays and goes into a credit balance, we automatically refund up to the value of £5,000, provided they have kept their details up to date and can be validated.”
They continued:
“In all other cases, we use a range of communication methods to contact customers and arrange their refunds. We are reliant on customers responding to us and engaging with us to receive their refund.”
‘Genuinely shocking’ findings
Nick Hillman, director of the Higher Education Policy Institute (Hepi), described the figures as “genuinely shocking”.
He told Research Professional News:
“In most cases, people repay their student loans through the tax system via their employers, so these people should not generally be that hard for the authorities to find. If you pay your tax late, you get a fine, but when it comes to official bodies giving money back to people, the processes are clearly not so good.”
He added:
“There will always be large numbers of people who overpay a little on their loans because of the way the student loan system is based on whole tax years. But no one should routinely be paying back for more than a few months longer than they should, and the refunds afterwards should always be speedy.”
Hillman also encouraged graduates to check their loan repayments to see if they might be eligible for a refund.
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How graduates can avoid overpaying
The SLC has stressed that over-repayments are entirely avoidable, provided borrowers keep their bank details updated and sign up for a direct debit scheme in the final stages of repayment.
The spokesperson said:
“We also strongly encourage customers to keep their contact and bank details up to date in their online account to ensure they don’t miss any refund communication. Customers can also log in to their online account to check if they are due a refund.”
Graduates who suspect they may have overpaid can log in to their SLC online account or contact the SLC customer service team to check their balance and request a refund.
Millions in unclaimed overpayments
This is not the first time significant amounts of student loan overpayments have gone unclaimed. In 2019, Research Professional News revealed that over a nine-year period, more than £28 million in student loan overpayments had not been refunded. At the time, over half a million former students had unknowingly overpaid on their loans.
Final thoughts
While most graduates eventually receive a refund, these latest findings highlight ongoing issues with the repayment system. Despite improvements in communication between HMRC and the SLC, some high-earning individuals remain unaware that they are owed thousands.
Experts are now urging graduates to double-check their repayments, as failing to do so could mean missing out on a substantial refund.
