Home working to blame for ‘inexcusable’ £20m student loan overpayments

Students with pound signs illustration
Students with pound signs illustration

Graduates overpaid a “jaw-dropping” £20m in student loans due to government staff working from home last year, it has emerged.

More than £20m was overpaid in 2021-22, a surge of 19pc from the year before. The number of graduates overpaying rose by 15pc to 52,000, according official Student Loans Company figures.

Graduates overpaid £390 on average, compared to £377 the year before.

“The increase in customers in an over-repayment position can be predominantly attributed to effects of the pandemic,” the government agency said.

“With SLC transitioning to fully remote working, the decision was taken, in agreement with the Department for Education, to pause some customer contact practices within the repayments function.”

It meant some graduates who had in fact cleared their debts during the year carried on making monthly repayments, as SLC staff failed to inform them their loans were settled.

Others were on the wrong payment plans or were paying more than they needed to, but were not informed.

Sarah Coles, of fund manager Hargreaves Lansdown, said the surge in overpayments was a “horrible reversal” after years of falling overpayments.

She described the numbers as “jaw-dropping” and said graduates had “needlessly forked out hundreds of pounds at a time when their finances were under real pressure”.

Liz Emerson, of the Intergenerational Foundation, said young people had been “ghosted by yet another government agency” working from home.

She said: “Meanwhile, the Chancellor has chosen to benefit the pension pots of wealthier older people while young people continued to be taxed at crippling rates made worse by inflation.

“While they’re struggling with the cost of living crisis, the Government isn’t spending money it should be on communicating that graduates are overpaying. That money could have gone on rent or heating – both are issues other generations have had help with,” she said.

Ms Emerson said working from home was “no excuse” for the spike in overpayments. “These are the finances of younger people and they shouldn’t be less important than other age groups,” she added.

A spokesman for the SLC said the company had now resumed contacting borrowers normally.

It added it had increased its refund limit to £3,000, from £500, providing more protection for those who overpaid.

“This has resulted in over repayments now being at an all-time low, continuing the pre-pandemic trend,” he added.