Student Loan Calculation Error

ShrewdMove

I am hoping there is someone reading this who can provide some advice.

I took out a student loan in 1999 which I made automatic payments on through PAYE. On 09/04/2008 I received a letter from the Student Loans Company (SLC) telling me that my loan had been repaid in full. Payments then stopped from my salary.

For the past 6.5 years I have been under the impression the loan had been repaid but was surprised to see on this months wage slip (Sept 2014) a deduction for a student loan of £102.

Having contact SLC they informed me that in July 2014 they reviewed my old account and discovered an error in the calculations for the FY07-08. The amount HMRC informed them I had repaid for the period was £1131 when they should have deducted £1331. In the FY08-09 they deducted £94.00, leaving an outstanding balance of £106 which SLC did not realise. In April 08 the SLC wrote to me telling me that my loan had been repaid in full and they stopped requesting payments through HMRC.

Now they have reviewed the account and found an outstanding balance of £106 from 2008 with interest added to 2014 comes to £195. They have notified HMRC to start taking payments from my wages again, and they have deducted a first payment of £102 this month and will continue to make the same deduction until the end of this financial year.

I can almost stomach that if a mistake was made in the calculations then I have to pay that amount but to then charge me interest for 6.5 years on an amount which I didn’t know I owed seems unfair. Especially when the SLC themselves thought the loan had been paid and had written to me stating this. Do I have any rights here or am I liable to pay this money and the interest they are requesting?

Sorry for the long post and thanks for thanking the time to read.

Clive_Woody

I would look up their complaints process and at the very least demand that they remove any interest payments as this is a mistake of their making and you should not be liable for any interest they are trying to add on.

If the balance owed after their review was £195 and they have just taken £102 (leaving a balance of £93) I cannot see how they could justify taking payments of £102 until next April. Have I missed something here?

Have you tried calling them to sort this out?

ShrewdMove

Clive_Woody wrote: »

I cannot see how they could justify taking payments of £102 until next April. Have I missed something here?

Clive_Woody wrote: »

Have you tried calling them to sort this out?

The way that the SLC take payments on the loan is through HMRC via PAYE. HMRC only notify the SLC at the end of the FY. The SLC at that point would then rebate any over payment. I could post payslips to the SLC prior to April to show how much HMRC have claimed and they should then notify HMRC to stop taking payments but if I don’t do that they would continue to take payment every month until the end of the FY when HMRC notify them of payments made in the period.

I have spoken with SLC prior to this post, but the operator said he apologised that its taken 6.5 years but there’s nothing he could do as it now shows an outstanding balance. I asked to escalate my situation to a more senior level and he said that someone will call me back within 24-48hrs.

I was hoping that posting here that I might have some ammunition / tools to use when they do call.

thebritishbloke

Send them a letter complaining about the interest. I would expect them to agree to repaying the £106 via debit card (well, now £4) with them and have the loan be settled. They're regulated differently but I still don't think it's legal for them to charge interest for their own mistake.

CLAPTON

ShrewdMove wrote: »

I am hoping there is someone reading this who can provide some advice.

I took out a student loan in 1999 which I made automatic payments on through PAYE. On 09/04/2008 I received a letter from the Student Loans Company (SLC) telling me that my loan had been repaid in full. Payments then stopped from my salary.

For the past 6.5 years I have been under the impression the loan had been repaid but was surprised to see on this months wage slip (Sept 2014) a deduction for a student loan of £102.

Having contact SLC they informed me that in July 2014 they reviewed my old account and discovered an error in the calculations for the FY07-08. The amount HMRC informed them I had repaid for the period was £1131 when they should have deducted £1331. In the FY08-09 they deducted £94.00, leaving an outstanding balance of £106 which SLC did not realise. In April 08 the SLC wrote to me telling me that my loan had been repaid in full and they stopped requesting payments through HMRC.

Now they have reviewed the account and found an outstanding balance of £106 from 2008 with interest added to 2014 comes to £195. They have notified HMRC to start taking payments from my wages again, and they have deducted a first payment of £102 this month and will continue to make the same deduction until the end of this financial year.

I can almost stomach that if a mistake was made in the calculations then I have to pay that amount but to then charge me interest for 6.5 years on an amount which I didn’t know I owed seems unfair. Especially when the SLC themselves thought the loan had been paid and had written to me stating this. Do I have any rights here or am I liable to pay this money and the interest they are requesting?

Sorry for the long post and thanks for thanking the time to read.

all a bit unclear


HMRC don't deduct anything from your pay roll directly;
they merely tell your employer to deduct SLC;
the amount deducted is determined by your employer's payroll and not HMRC.

ShrewdMove

CLAPTON wrote: »

all a bit unclear


HMRC don't deduct anything from your pay roll directly;
they merely tell your employer to deduct SLC;
the amount deducted is determined by your employer's payroll and not HMRC.

Apologies if I was unclear.

HMRC notify employers that deductions for a student loan need to be made. The ammount of deduction, is set at 9% of salary that is above £16,910 which in my case works out at £102 a month. It is the notification from HMRC to start taking payments for a student loan which triggers the deductions and having spoken with my employers HR they cannot stop deducations until they recieve a notice to stop from HMRC.

Having then spoken with HMRC they will not stop deductions without being notified by the SLC. As the SLC are saying I still owe them money the payments will not stop.

CLAPTON

ShrewdMove wrote: »

Apologies if I was unclear.

HMRC notify employers that deductions for a student loan need to be made. The ammount of deduction, is set at 9% of salary that is above £16,910 which in my case works out at £102 a month. It is the notification from HMRC to start taking payments for a student loan which triggers the deductions and having spoken with my employers HR they cannot stop deducations until they recieve a notice to stop from HMRC.

Having then spoken with HMRC they will not stop deductions without being notified by the SLC. As the SLC are saying I still owe them money the payments will not stop.

yes, I was curious how the error occurred in the first place.

ShrewdMove

CLAPTON wrote: »

yes, I was curious how the error occurred in the first place.

I wish I knew, the response from the SLC was just to apoligise that it hadn't been noticed for 6.5 years and their explanation that an oversight had occured that wasnt noticed until July 2014 when carrying reviews of old accounts dosnt really answer that question. I will be sure to ask that again when they call.

I find it disgusting that no effort was made to contact me when they realised their error and that the current system enables them to make deductions from my salary without me giving any authority to do that.

I would have thought as the loan was closed as paid in full in 2008 any contract which I entered into in 1999 would have ended at that time. Meaning that they have no legal right to start taking payments again but this is the sort of thing I was hoping someone on here might know.

Puddylove

I have similar experiences regarding SL repayments - no error (yet) but they are taking 9% of my salary.

My loan will be paid off at the end of April but I have been told they will continue to take 9% of my salary until Apr 16, when I may ask for the overpayment (in excess of £2k back) and they will 'consider my application'.

Incredible, but true. I'm going to pay off a lump sum in Jan to beat the FY deadline.

ShrewdMove

Puddylove wrote: »

I have similar experiences regarding SL repayments - no error (yet) but they are taking 9% of my salary.

My loan will be paid off at the end of April but I have been told they will continue to take 9% of my salary until Apr 16, when I may ask for the overpayment (in excess of £2k back) and they will 'consider my application'.

Incredible, but true. I'm going to pay off a lump sum in Jan to beat the FY deadline.

How would you respond to them if hypothetically in 7 years time after paying off your loan the SLC started taking payments again from your salary? - Stating they made an error in the calculations.

Puddylove

ShrewdMove wrote: »

How would you respond to them if hypothetically in 7 years time after paying off your loan the SLC started taking payments again from your salary? - Stating they made an error in the calculations.

If it were their error as in your case, I'd appeal to them to remove any interest added. I might also suggest that they reduce the outstanding balance as recompense for their error.

Having done all that, I'd just repay it - pick your battles and don't waste life being angry/bitter over things that you can't change.

Better to repay it and be happy regardless.

I'm weird though. :rotfl: