Tens of thousands of university graduates across the United Kingdom are set to receive financial refunds following two separate data and reporting errors that mistakenly inflated their student loan balances. The Student Loans Company (SLC) confirmed that it has launched an exercise to contact approximately 41,000 affected individuals whose balances were incorrectly increased, assuring them that overpaid sums will be fully returned.
The widespread blunders altogether impacted 71,000 individuals holding Plan 2 loans, a specific repayment track covering undergraduate courses that commenced between 2012 and 2022. According to the SLC, the accounting discrepancies represent roughly 1.3 per cent of all active Plan 2 accounts.
The administrative failures stem from two distinct sources. The first involved an internal technical glitch within the SLC that led to the application of incorrect income data when calculating annual interest. The second issue originated from His Majesty’s Revenue and Customs (HMRC), which misreported earnings for graduates who generate income through both Pay As You Earn (PAYE) systems and self-assessment tax returns.
While 41,000 individuals experienced an artificial spike in their debt balances, a separate cohort of 30,000 customers had their total outstanding balances incorrectly reduced. The SLC has clarified that individuals within this second group will not face penalties or be required to pay refunds; instead, their accounts will simply be re-adjusted to reflect the accurate interest amounts. Furthermore, graduates who have completely cleared their debt will not be forced to resume payments.
University graduates holding Plan 2 loans have faced mounting pressure from escalating debt in recent years. Under current rules, these loans accumulate an interest rate of 6.2 per cent during the period of study, determined by the Retail Price Index (RPI) plus three per cent, before transitioning to a variable rate based on subsequent earnings.
The systemic calculation errors exacerbated existing frustrations among former students, many of whom have noted that their total balances continue to climb each year despite making regular, consistent repayments from their salaries.
The SLC and HMRC have issued a joint apology for the disruption and confirmed that both technical issues have now been fully resolved. Officials stated that those affected do not need to take any independent action, as standard monthly repayment amounts are not slated to change. The adjustments are scheduled to be displayed automatically on individual annual statements, which are projected to be accessible online before the end of September.
The announcement follows recent government interventions in higher education finance, including an incoming cap on Plan 2 and Plan 3 interest rates, which will be limited to a maximum of six per cent for the 2026/27 academic year.
