Student Loans Company in £36.5m cock-up

The Student Loans Company (SLC) has been plunged into renewed controversy as it was revealed that more than 63,000 graduates have been made to over-pay their student loans.

Unknown to their customers, the Glasgow-based organisation collected a surplus £36.5m during the year 2010-11, at an average of £577 per person. The money continued to be deducted from salaries sometimes for months after the loans had been paid off, with some individuals claiming they were charged thousands more than was due.

This is not, however, a one-off. The SLC has been overcharging ex-students for years, despite repeated guarantees that the phenomenon would never happen again. Moreover, the over-payments have been increasing markedly - from around £16m in 2007-08 to £19m in 2008-09, and to £22m in 2009-10.

Founded in 1990 to provide low-interest government-backed loans to UK students, this is just the latest in a history of failings. In 2009, The Cambridge Student (TCS) reported on a History student at Clare College, whose application for a Disabled Students Allowance was lost by the SLC. They dealt with the issue poorly, repeatedly placing the blame on the student who said at the time: "I was lied to on the phone originally and told I had simply heard nothing because of a two week backlog."

In 2010, the SLC's chief executive and chairman were forced to step down after being heavily criticised for the countless delays in the application process. Meanwhile, the new chief executive Ed Lester was criticised earlier this year after it was revealed that he had managed to avoid paying tens of thousands of pounds worth of taxes by receiving payment through a private company.

According to Pete Mercer, vice-president of the National Union of Students (NUS), this most recent hiccup comes down to disorganisation and insufficient cooperation between the SLC and HM Revenue & Customs (HMRC). He states: "The huge overpayments we're seeing annually on student loans demonstrate that a switch to real-time communication between the Student Loans Company and HMRC cannot come soon enough."

Inadequate communication between the SLC and HMRC means that there is a time lag of several weeks between the end of the financial year and HMRC's disclosure of how much the customer paid during those 12 months, putting people at risk of being charged more than necessary during this gap.

Kevin O'Connor, the head of repayment at the SLC, assured critics: "We contact all graduate customers who are identified as likely to overpay their loans and advise them of their options coming towards the end of their repayment." The SLC also maintains that all affected former students are refunded with added interest, provided that these individuals realise that they have been over-paying and take the necessary action.

At a time when graduates' post-university debt is sky-rocketing and the number of people in the process of paying off their borrowing is nearing three million, this news is more worrying than ever. However, former students are not the only ones feeling the effects of the SLC's failure to perform. A current undergraduate at Trinity Hall told TCS that they only received their maintenance grant at the very end of the academic year for which they applied after months of stressful phone calls and false information – an extra worry provided by a company that is supposed to specialise in financial assistance.

Mimi Yagoub – News Reporter

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