More than £28million in overpayments on student loans is being held by the government.
The Student Loans Company (SLC) found in a nine-year period, more than 500,000 former students in England overpaid on student loans, paying on average £600 more than they owed.
While much of the £308million overpaid has been given back to graduates, almost £28.5million remains unclaimed, figures obtained by Research Professional News found.
The SLC said it pro-actively contacts everyone who overpays to rearrange refunds. To improve its system, it has started to receive payment information from HMRC.
What does the data show?
- Between 2009/10 and 2017/18, a total of £307,821,092 was overpaid.
- Of this, £28,460,095 has not yet been refunded.
- A staggering 513,134 former students had overpaid by an average of £597.
How has this happened?
Overpayments are made because of the way information is shared about student loan repayments.
Typically, the SLC received repayment information once a year, at the end of the tax year in April.
This led to a system where if a graduate repaid their loan during the tax year, say for example in September, they would have still been making payments up until the end of the tax year.
The company now writes to graduates in the last two years of their repayments to suggest they can pay through direct debit, as opposed to through their employer, to help prevent over-repayments.
An SLC spokesman said: “We want all customers to repay the right amount and not to over-repay on their loan.”
The SLC spokesman added: "We pro-actively contact all customers that have over-repaid to make arrangements for a refund; customers who do not participate in the direct debit scheme can also claim a refund at any time by contacting us.
“We urge all customers to keep their contact details up-to-date so that we can contact them at the appropriate time about the direct debit scheme.”
By contacting HMRC about its repayment scheme, SLC said this will "help to prevent customers from over-repaying and provide them with more up-to-date information about their loan repayment”.
The government said steps were being taken to avoid another set of overpayments.
"This included changing the law in April to allow weekly data sharing between HMRC and the Student Loans Company, which will help to prevent graduates repaying too much,” a government spokesman said.
“If a borrower believes there has been an over repayment, they should contact the SLC to seek a refund.”
How can I claim a refund?
The SLC said it has made efforts to "proactively contact all customers who have overpaid".
The contact details might be out of date, so borrowers who believe they might be entitled to a refund have been urged to get in touch with the SLC.
A spokesman for the SLC said: "We want all customers to repay the right amount and not to over-repay."
A Department for Education spokesman added: "If a borrower believes there has been an over-repayment, they should contact the SLC to seek a refund."