A woman who was told in 2010 that she had paid off her student loan in full has become the latest person to fall foul of the “shambolic” Student Loans Company. Six years after apparently making her final repayment the government-owned organisation has, out of the blue, claimed that Louise Winmill still owes £1,112 – plus interest.
Winmill thought she had seen the last of the SLC back in November 2010 when she used a work bonus to pay off her outstanding student debt of £3,394. At the time her employer was sent a note by HM Revenue & Customs instructing it to cease loan repayments. She was also sent a letter by the SLC confirming that the loan had been repaid in full.
Winmill, who attended University College London and now works in communications, says she heard nothing from the organisation for almost six years – until she opened her pay slip last month to see a £273 student loan deduction.
“My first reaction was that this had to be a mistake. I’d had two letters confirming it was paid off. But when I called up I was told that it had made an error, and as a result I still owed more than £1,100 – and that it had been accruing interest for six years. Apparently the SLC wrote to me in October 2015 to explain, though it of course sent this to a previous student address, so I never received the letter. I just couldn’t believe it,” says the economics graduate.
The SLC told Guardian Money that back in the 2007-08 tax year, a “human error” had led to Winmill’s account being wrongly credited twice with £1,100, and that the problem had only recently come to light.
She is just the latest graduate to fall foul of the SLC’s apparent inability to consistently calculate who owes what, and is not the first to face a demand years after the loan was repaid. Last August the Guardian’s sister paper, the Observer, reported on a student who was told he owed £83 from a debt he had been told was cleared in 2009. Other students have since found they have massively overpaid their loans, leading to accusations that the organisation doesn’t know what it is doing.
Graduates have no control over the repayments as they are taken directly from pay packets by HMRC, which then hands them over to the SLC. Those having problems report difficulties in getting information out of the latter organisation.
Winmill says she has spent hours trying to get the proper figures. She has now asked HMRC to confirm what she has repaid because she “has no faith” in the SLC’s figures. “It has been a nightmare trying to sort this out – dealing with the SLC is incredibly difficult – and it was only when I asked the Guardian for help that it even sent me a statement,” she says. “It claims some payments were mistakenly credited to my account twice, but has provided no proof of this and I’ve no way of verifying it. Not only is it taking money from my pay packet without prior notice or my permission, it initially wanted to charge me interest on the balance, too, despite the fact that any error was clearly its own. The whole thing has been a shambles and I wonder how many other students past and present have been faced with similar challenges as a result of these errors and inefficiency?”
A spokesperson for the SLC has apologised and it has agreed to waive the £169 interest her account accrued. “We are sorry for the difficulty experienced by Ms Winmill and for any inconvenience this has caused. Unfortunately, due to a human error the repayment was posted against her balance twice, so it appeared that she had repaid in full. This error was subsequently identified and the account balance was corrected, which resulted in a balance still to be repaid.”
Since its inception in 1989 the not-for-profit SLC has often been in the headlines. It is 85% owned by the UK government, with the rest shared between the Scottish, Welsh and Northern Irish governments. It says on its website that its mission “is to enable our customers to invest in their futures by delivering secure, accurate and efficient assessment, payment and repayment services”.
In July 2014 it was accused of using controversial tactics akin to those of payday loan company Wonga after the Daily Mail revealed it had been sending out letters from what appeared to be an independent debt collection agency called Smith Lawson & Company. At the time the SLC said it was suspending the use of the letters, which had used its “secondary brand”. In 2010 both the SLC’s chief executive and chairman resigned over criticism of chaos in the student finance system. Thousands of students in England were left without grants or loans after administration problems.
While most debts are unenforceable after six years, the Student Loans Company has an exemption from this, and is allowed to chase debts that other loan providers would be forced to write off.
Power of the petition
The retrospective rise in the cost of student loans will be debated in parliament on Monday afternoon after a petition opposing the changes obtained 130,000 signatures. Campaigners are urging students and their parents to lobby their MPs over the weekend.
The petition, started by Alex True while he was doing his finals at Durham University, focuses on a promise made by the government in 2010 that from April 2017 the student loans repayment threshold of £21,000 would be upped each year with average earnings.
But last October George Osborne said he was freezing the threshold until at least 2021. According to government estimates, this will leave more than 2 million graduates paying £306 more a year by 2020-21 if they earn in excess of £21,000 at that point.
Martin Lewis, founder of MoneySavingExpert and the former head of an independent taskforce on student finance, opposes the move. He is calling on those affected to make their feelings known to their MPs ahead of the debate. “No commercial company would be allowed to change a loan contract in this way … and the government shouldn’t be allowed to either,” he says. “It’s against all forms of natural justice. The government, without asking parliament, has changed the terms of loans long after many signed up – indeed, some had already graduated. It will cost many thousands.”
