Thousands of Graduates Overpay on Student Loans: How to Avoid Excess Deductions


Written by: Emma Lunn

03/11/2020

The Student Loans Company (SLC) is urging borrowers to switch payday deductions to direct debit in the final months of their student loan repayment in order to combat accidental overpayments.


According to the SLC, in the past fiscal year, more than 31,000 graduates made unnecessary overpayments at the end of their loans. This resulted in an overpayment of over £ 19million.

But SLC says overpayments are entirely preventable if clients switch from automatic deductions from their wages to direct debit at the end of their loan term.

He says nearly £ 16million in overpayments has already been paid off, but this is only possible when contact information, including bank details, is up to date.

SLC writes to each customer as they enter the last two years of repayment urging them to switch to direct debit to avoid paying too much. However, over 75% of clients choose to continue paying through payroll deductions.

To make it easier to receive a refund, SLC in March began automatically refunding customers with up-to-date information.

Since its inception, SLC has automatically refunded over £ 4million to customers who have not signed up for the direct debit system and have not yet requested a refund.

But this is only possible when SLC maintains a borrower’s contact details, including bank account information.

Steven Darling, director of repayment strategy at Student Loans Company, said: “Excess repayments are completely preventable and occur if a customer does not switch to direct debit in the later stages of their repayment term.

“It’s never been easier to know when the refund is due, as customers can quickly check their up-to-date balance on our online refund service and call us to switch to direct debit in the final stages of their transaction. ready.

“We are also proactively reaching out to customers as they enter the last two years of repayment to encourage them to switch to direct debit. We’ve worked hard to make sure every customer knows when to switch to direct debit, and for those who don’t, we’ve accelerated and improved our automatic refund process.

“Customers can always contact us if they need a refund, but we prefer to completely avoid over-refunds and have customers take action when they reach the end of their refund period. ”

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