Thousands of students across the UK have been affected by a major system error within the Student Loans Company (SLC), which resulted in their loans not being written off when they should have been.
The error impacted about 4,000 students who have Advanced Learner Loans which are paid to people who want to go to university but do not have the right qualifications, and cover the costs of a course at a college or training provider.
Once they complete a higher education course, following their college course, the loan should be written off. However, for many, this was not the case, according to an investigation by the Parliamentary and Health Ombudsman (PHSO).
Calls are now being made for urgent improvements to the SLC’s loan processing systems.
Jennie Bradbury, 38, from Stoke-on-Trent, was one of the many affected by the system error.
She took out a £2,395 Advanced Learner Loan in July 2013 to fund a one-year access to higher education diploma in health at Stoke-on-Trent College. This qualification allowed her to progress to a midwifery degree at Keele University.
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According to the rules, her loan should have been automatically written off upon completing her degree in September 2019. But the SLC failed to cancel her loan for four years.
Ms Bradbury repeatedly contacted the SLC, and despite assurances that the loan would be written off automatically, she continued to receive correspondence stating that it had not been cleared.
In frustration, she escalated her complaint, first to the Independent Assessor for the Department for Education (DfE) in 2022, and then to her MP, who referred it to the PHSO in early 2023.
The Ombudsman found the SLC had failed to process the loan write-off correctly and had not transferred the outstanding balance from Jennie’s Advanced Learner Loan to her graduate loan account.
Following the investigation, the SLC finally wrote off her loan in September 2023.
The PHSO recommended that the SLC issue a formal apology, outline a clear communication plan for affected students, and provide Jennie with an additional £200 in compensation, which the SLC has now done.
Reflecting on the ordeal, Ms Bradbury said: “It was really frustrating. It made me really anxious as well because I was worried about the interest that was going onto my other loan and how it was going to affect it when I was paying it back.”
Rebecca Hilsenrath KC of the PHSO said: “Thousands of students have been affected by this and have been paying off a loan which should have been written off. The problem was exacerbated by the fact that no one listened, and no one did anything.”
Many graduates are struggling with student debt, with The i Paper recently revealing that over 100,000 graduates currently owe more than £100,000 in student loans.
In the UK, student loans are typically divided into different plans, with repayments kicking in once a graduate earns above a set income threshold.
Under the current system, for Plan 2 loans (which apply to most students who started university after 2012 but before 2023), repayments begin once earnings exceed £27,295 per year, with 9 per cent deducted from any income above that threshold.
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A spokesperson for SLC said: “All eligible Advanced Learner Loans balances have been written off and no customer has been financially disadvantaged as a result of this issue. We apologise to any customer affected and have confirmed this approach to the PHSO. SLC has taken steps to ensure this issue cannot happen again.”
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