Student Loans Company Nightmare [before christmas]

Hello,

Up until November 2006, I was at University studying a degree course [3rd Year], and was receiving student loan. At this time, I recieved a job offer from a headhunter and was in a position on my course (not learning anything) where I felt it would be of equal value to me to accept the offer and 'go for it'.

During this time I filled in a piece of paper the university sent to me by post and returned it to them. On hearing nothing from them, I assumed that everything had been sorted and that 'that was that'. In the January I recieved, to my surprise, the next lump of my 2006/2007 Student Loan. I got my paperwork out and noticed that the loan approval form I had been sent at the start of my academic year said that I had been approved my loan for the period 2006/2007.

So I accepted that I was just going to have to pay the loan off as any normal student does - through the PAYE system at a pre-determined rate per month.

The final installment of my 2006/2007 loan came in a few months later, which I worked into my budgets and spent over time. It was April now, and I recieved a rather alarming letter, which I thought at first was a late april fools joke, as it arrived on 2nd April 2007. It informed me that the LEA for my county had informed the SLC that I had been overpaid for my loan and had reassessed my loan entitlement based upon my status. The letter stated that a payment of (from memory) £4410.00 was now due. A subsequent letter stated that an additional amount of circa £710.00 was also due for overpayment of a government grant.

The letter continued that I could make payments via telephone (credit / debit card) or send a cheque. I immediatley rang them, and after almost 5 minutes explaining the situation detailed above to the advisor, the reply was 'The LEA has only just conducted its review of students, and so we have only just recieved this information'. So for thier delay, I have to pay out instantly?

Luckily, I was able to say point blank 'I can't afford to pay that, though' (who can?!), and agreed to pay £30 per month towards this large sum of money.

Jump to present day. I have recently tried & failed to launch my own design agency, and now find myself unemployed and looking for work. After my November repayment bounced, I called them and offered them double in december 'if i had it'. However, due to a project falling through while I was running said design agency, I couldn't pay this. 2 days ago I recieved a letter of 'Final Notice' for the sum of £710 - threatening legal action if I didn't make a payment within 14 days. This letter arrived on Saturday morning at 1:20pm. The telephone lines are now shut at SLC.

This whole situation has brought to my attention the one question: Are they actually allowed legally, as a loans company, to reassess my eligability after approving me the loan? I have now paid £210 to the company. Could I reclaim this and have the 'overpayments' deferred to the PAYE system?

Sorry for the essay!
Mark Newby.