86,000 graduates overpaid loans by £50m

86,000 graduates overpaid loans by £50m

The Times, 23/9/17: Annabelle Williams, Andrew ElIson

The taxman has blamed the Student Loans Company for an overpayment fiasco in which tens of thousands of cash-strapped graduates have repaid £50 million more than necessary. Figures obtained by a freedom of information request show that around 86,000 former students overpaid last year compared with only 52,000 in 2010. The average overpayment was £592 but 260 people paid back between £5,000 and £10,000 too much in 2015.

HM Revenue & Customs receives real-time data from employers and collects student loan repayments monthly through the “pay as you earn” system. But information on how much it has collected is passed on to the Student Loans Company (SLC) only once a year.

It means borrowers can never see a current figure for how much is outstanding. The balance and interest rate displayed on graduates’ online accounts are always between five and 17 months out of date. Graduates receive an update each autumn detailing their balance and interest rate at the end of the last tax year.

Speaking to MPs on the Treasury select committee, Jon Thompson, the chief executive and permanent secretary of HMRC, said the taxman was able to share the data more frequently but “the question is whether [the SLC (based in Scotland! Ed.) can ingest it or not” He added that there was a project under way designed to provide more regular updates but he gave no indication of when it might be ready.

As a government-owned lender, the SLC is answerable only to parliament and is not under the remit of the Financial Conduct Authority, the regulator which oversees UK banks.

George Bull, a tax partner at RSM, the accountants, accused the government of double standards.

“There is an irony in that employers are required under threat of penalties to report to HMRC in real time but there is no corresponding duty on HMRC to report each repayment to the SLC,” The row comes as pressure grows on ministers to offer concessions to students, millions of whom face a compound monthly interest rate on their loans of 6.1 per cent The Bank of England base rate is only 0.25 per cent. The chancellor is said to be considering raising the threshold at which students have to start repaying loans to help those on lower incomes.

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COMMENT: Of course, deliberately from the British media, you would not know that the taxes levied on graduate students were a source of revenue for the British Government to subsidise students from the rest of the UK.

Scottish students pay no tuition fees at all and nor do those from the EU studying in Scotland. Welsh students can get a non-means tested grant of £4,954 which does not have to be repaid. Fees for tuition in Northern Ireland are capped at £4,030.

You might think this is racial discrimination (as defined by the Race Relations Acts). However, the British Government is immune from any complaint as one of our members who took this grievance to the European Court of Justice discovered and the European Court of Human Rights requires a student to present a personal case. This is just one of the reasons the CEP campaigns for fairness and equality for England as a nation within the UK.

Regards

Scilla Cullen

6/11/17