Student Loan Repayment - delay in applying repayment between Plan 1 and Plan 2

howtobest

Hello,

I took out a Plan 1 loan to study (grad 2012) and started repaying, then was made redundant and went studying in 2015 taking out a small Plan 2 loan. 

I started repaying in 2016 where my PAYE salary would get split between both plans, with 2/3 going into Plan 2. I repaid Plan 2 in 2021, and this is when I noticed that the money was still going into Plan 2. I contacted Student Loans who put a regular adjustment to take the money back into Plan 1 and they said it should stop once the balance is zero.

The repayment statements stopped coming in 2019 and I didn't really pay much attention until I requested a statement this year and noticed that the money was still being sent to Plan 2 and the dual loan adjustment moving the money back to Plan 1. The problem is that this adjustment is around 15 days later than the original payment (e.g. I PAYE paid 24/04/2025 and Plan 1 got 1/3 applied then, and on 11/05/2025 the dual loan adjustment moved the 2/3 from Plan 2 to Plan 1).

I queried this again and Student loans said they cannot close the Plan 2 while they receive regular updates from HMRC. 

This leaves me with a question whether the interest charge is being inflated because the majority of the payment for the month is being moved after the month has ended. Student Loans could not answer when it is that the interest is calculated and against what balance. One customer agent said it's calculated daily on the prior day balance, the other said it's monthly after the Dual loan adjusments. None could quantify their claims with an example with dates and values. I don't think they understand what I mean, because the only reply I get is that my money is being correctly moved back into Plan 1 from Plan 2.

31/08/2022 Interest 1.50% +27.99

10/09/2022 Balance Adjustment - Dual Loan Adjustment (AUGUST) -62.11

24/09/2022 PAYE repayment received (SEPTEMBER) -53.00

30/09/2022 Interest 2.75% +49.18

08/10/2022 Balance Adjustment - Dual Loan Adjustment (SEPTEMBER) -192.46

24/10/2022 PAYE repayment received (OCTOBER) -53.00

If the interest is calculated daily on prior day balance, does it then mean that between the time my PAYE reduces the Plan 1 balance and when it's reduced again the following month the interest amount is incorrect? If the interest is only looking at a single value (opening balance, closing balance etc), then the timing is important because the opening or closing balance for the current month will not have been reduced until the following month. I am not an economist or an accountant, but I would like to understand whether I am being charge the correct interest amount (£).

Thank you!