Student Loans - Is this true?

Vickicb · 29 March 2007 at 8:38PM

I've just been sent this from a friend - anyone know if it's true?

"For most unsuspecting graduates who are paying back their student loans, the Inland Revenue takes payments directly from your employer in the same way as they take tax. I.e. the more you earn the more you pay, this includes bonuses etc. However after taking monthly amounts the inland revenue does not pay this directly to the student loan company, instead they wait until the end of the financial year in April and then pay the entire year off to student loans. The effect of this is that the Inland Revenue hold on to your monthly payments for up to a year earning them interest. During the same period, because student loans have not received these funds, they in turn charge the graduate interest on the outstanding amount even though it has been paid to the Inland Revenue.

Bottom line is that for those in this position we pay interest to student loans on money which has been taken from our accounts which the Inland Revenue keeps and earns interest on."

CLAPTON · 29 March 2007 at 9:21PM

have you asked the student loans company if this is true?

davey69_2 · 30 March 2007 at 12:29PM

Hi Vickicb, this is indeed true (or its what has happened to me too -dont know if it is different by each LEA) but I only started re-paying my loan two years ago, when I contacted them last November, they had only received the small amount I had paid the previous financial year. I have been paying for the last year at least £90 per month (one month £500 with my bonus - boohoo!) and they havent got that and wont until my employer files their tax return!! Not fair as it seems both Inland revenue and Student Loans Co benefit from this system!!

fallenwiccan · 30 March 2007 at 12:48PM

there is an epetition going round (along with that email probably) to try and get them to change the system cause at the minute it means R&Cs are gaining interest on you money and the SLC is adding interest to your loan even though you think you're reducing it.

i've signed it because although i'm not paying mine it's because i'm still at uni making my loan bigger!

Jarlawuk · 30 March 2007 at 1:03PM

Yes sadly its true

helenrachel_2 · 30 March 2007 at 1:09PM

This definitely isnt true. The SLC missed a whole year of my payments and took a long time to credit some others but they back date everything to the date it should have been credited. So I checked with them what their process is as i wanted to check for myself whether they were overcharging me.

What they do is take the total amount you paid in a year and split it monthly and reduce the amount outstanding at each stage, recalculating the interest appropriately.

It can take a while for statements to catch up with what you have paid but they definitely do not do what this petition says they do.

ktb · 30 March 2007 at 1:10PM

I have just signed the petition... I'm disgusted!

*student loan petition*

*edit*... I just read somewhere that apparently the interest might be recalculated by the SLC as if the repayments had been coming off monthly... but i'm useless at maths so dont understand how exactly that might work.

pollyanna24 · 30 March 2007 at 1:21PM

Does this mean when I ring up in October (I don't want them taking out the full £104 that they normally take as I won't owe that much by then), they won't be able to give me a final figure as the payments are behind?

I don't want to be paying £104 after this date as I know I will have it paid off, but if they don't have up to date figures, how do they know? Do people get paid back if they overpay? I'm guessing it takes ages if they do and I'm not willing to take the chance!

misspoppy · 30 March 2007 at 1:25PM

I think you are best speaking to the student loans company themselves rather than relying on hearsay.

helenrachel_2 · 30 March 2007 at 1:51PM

pollyanna24 wrote: »

Does this mean when I ring up in October (I don't want them taking out the full £104 that they normally take as I won't owe that much by then), they won't be able to give me a final figure as the payments are behind?

I don't want to be paying £104 after this date as I know I will have it paid off, but if they don't have up to date figures, how do they know? Do people get paid back if they overpay? I'm guessing it takes ages if they do and I'm not willing to take the chance!

What i did when i realised that i paid off my loan but my statements were not showing this was photocopy all my p60's and recent payslips and send these to the students loan company and ask them to recalculate my loan. They then notified my employer to stop taking payments and refunded my overpayments. You should make sure to ask them to recalculate the interest and be prepared to chase them up.

The best thing to do as Miss Poppy says is to speak to the SLC about your individual circumstances. Some of the advisers are more helpful than others so perserve if you need to.

There are lots of problems with the SLC and the main one stems from the fact that they are dependent on the Inland Revenue giving them people's files at the end of each tax year which can seem to take ages. So this means that it takes ages for them to produce statements.

I have made a spreadsheet which calculates the amount owing at each point in time so that I could check whether the student loan co really did pay me back the right amount of money and recalculate the interest and I was happy that they did. I reconciled to within about 25p the amounts showing on my statements and was happy that they are doing the right thing. I have exams in April (professional ones) but after that i was planning on tidying up the spreadsheet and making it so that not just me could use it. When i have done this i will try and figure out if i can upload it on here so that other people can check their statements as the SLC/Inland Revenue do make mistakes. (eg they missed one whole year of my payments and i thought it seemed odd so this is when i started to query how they were calculating everything).

I hope this helps!

Imelda · 30 March 2007 at 2:04PM

Pollyanna,

I paid my loan off last year, this is what I did:
1. Contacted the SLC, they asked me to send photocopies of my last P60 and all my payslips for this financial year.
2. They worked out that I had overpaid and recredited my bank account (I put my sort code and a/c number on the fax I sent) within 3 days.
Fantastic you think, well it wasn't! The man at SLC did warn me that it takes up to 42 days for the stop order to be activated so I could find the next month's installment going out anyway (which it did). I called again and got it refunded (with interest, I think they calculate it at the court's rate of 8% but I could be wrong) and was assured that the next month all would be well. Yep you've guessed, it was deducted again. This process was repeated 3 times in all and then in sheer frustration I emailed their compaints dept (it's on the leaflet they send with each statement) and liaised with my payroll dept so they would look out for the stop order. All sorted within 3 days, not a penny has been taken since.
I think the SLC are relying on people not keeping tabs on their loans.... surely the situation is going to get worse and worse as many people of my year (1998) either just have/ or are about to finish paying?

Student Loans - Is this true?

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