Loan company takes massive overpayments and doesn't tell customers. But it's no shark...
You know how it is. Some shady organisation (legally) takes money out of your paypacket every month, but even after you have paid them back every penny you borrowed, they keep taking the money. And it’s up to you to ask for it back?
That is what has happened to tens of thousands of people paying back the Student Loans Company (SLC). In 2010/11 the company nicked £36.5m from paypackets that they were not entitled to take. And what’s worse is they are not going to tell you about it, waiting for you to claim the overpayment back from them.
Freedom of information request figures show that 63,210 people overpaid £36.5m in 201/11, the highest ever overpayment recorded by the SLC, following a £22m over repayment in 2009/10, £19m in 2008/09 and almost £16m in 2007/08. Perhaps this cunning ruse is why current Chief Executive Ed Lester gets a (nother) bonus by saving tax being paid through a private company.
Of course, SLC claim it is not their fault, blaming HMRC for the problem, which is at odds with their 2012 Annual Report statement that “employees from the SLC and HMRC work together and provide a single seamless service to customers”. They claim that as HMRC only notify them of the total amount of payments made in a year annually, they are incapable of working out that, of a loan finishes during a tax year, unless they stop taking payments, an overpayment will arise. It is largely graduates who have finished paying off their loan during the year who are affected, with an average overpayment of £577, although some claim to be thousands out of pocket.
And despite the fact that the SLC clearly know your name and where you live, and probably where you work, it seems they are also unable to inform people who have over repaid of the overpayment. Instead, graduates who think they may be affected are advised to write to SLC to claim any overpayment.
Given that student debt is already at an average of £13,000 (and that is before the tuition fees increase), with over 3 million people currently in repayment, so the situation is only going to get worse.
Since 2009, the company has allowed graduate coming to the end of their loan repayment period to pay by direct debit for the last two years, making overpayment less likely, as a direct debit can be more easily cancelled by either party. Graduates cannot stop a payroll deduction.
"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," said Kevin O'Connor, SLC head of repayment. However, he confirmed that the onus is on the customer to contact them for a repayment, than the other way round.
But this plan clearly isn’t working. The 2012 accounts show a massive £44.456m of cash still being held by the company on behalf of third parties. Although this figure isn’t broken down into specifics, it is a reasonable assumption that most of this is overpaid loan repayments that the ‘customer’ hasn’t realised has been taken 'in error'.
We think every single SLC customer should write to them and demand a refund. Seems only fair.