Number and value of loan over-repayments in tax year 2017/18 broken down by groupings of £250
Published 17 July 2019
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Request
“the number of overpayments made by customers in the tax year 2017/18 broken down by the values overpaid (to ensure anonymity this should be in groupings of £250). For clarity, “overpayments” is when a borrower repays more than their outstanding student loan balance.”
Response
Please refer to the attached spreadsheet for the over-repayment data that you have requested for tax year 2017/18.
Please refer to the notes associated with the data that are at the bottom of the tables on the “results” tab. In addition, please note:
- over-repayments of £5,000 and more have been combined due to the low numbers of borrowers falling within these higher bands; and
- large over-repayment values are due to unusually high earnings during the tax year, for example, a large bonus.
As you may be aware, student loan over-repayments occur due to the nature of the Income Contingent Repayment (“ICR”) (post-1998) student loan repayment scheme, where repayments are made through the UK tax system via Pay-As-You-Earn (“PAYE”) . ICR student loan repayments are collected through the UK tax system where borrowers remain in the UK, as using the existing tax collection processes of HM Revenue & Customs (“HMRC”) was determined to be the fairest and most cost effective, for both borrowers and UK taxpayers. Up until April 2019 SLC received student loan repayment information annually from HMRC, and the result of this process means that some borrowers nearing the end of their repayments may over-repay. Borrowers who took out student loans prior to 1998, who repay via Self Assessment, or are still repaying will not have over-repaid their loans.
SLC pro-actively contacts borrowers to advise them they have over-repaid their loan. If an overrepayment is identified on a borrower’s account SLC will contact the borrower to refund any monies over-repaid plus interest or alternatively the borrower can contact SLC to request a refund. For Northern Ireland borrowers refunds are issued in accordance with the provisions of regulation 20 of the Education (Student Loans) (Repayment) Regulations 2009, as amended. Borrowers with a credit balance on their account which has arisen due to over-repayment will be sent a letter asking them to get in touch with SLC. SLC cannot make a refund for an over-repayment until a borrower confirms their current bank details, therefore any borrower who has received a letter from SLC should check the letter to see if this advises them that they are due a refund due to over-repaying their loan, and if so, they should telephone the number stated on the letter.
Borrowers nearing the end of their repayment term may be eligible to complete their repayment term through the Prevent Over-Repayment (“POR”) scheme, which aims to prevent over-repaying via PAYE. Once the borrower has repaid the set amount over the agreed time the balance will be cleared and any over-repayment avoided.
If a borrower declines the offer of POR, when the next or subsequent repayment file received from HMRC is applied to their account it can create a credit balance. SLC will instruct HMRC to issue an automatic Stop Notice to the employer to advise them to stop taking deductions. The number of deductions taken in the next tax year after the loan was repaid in full can vary depending on when the repayment file is received from HMRC and when the employer processes the Stop Notice. If a borrower has not joined the POR scheme however contacts SLC to advise they expect to repay their loan soon, using their P60 and payslip information, SLC can calculate a predicted end date and schedule a Stop Notification to be sent to HMRC to request that the employer be informed to cease deductions, which will also avoid over-repaying.
SLC has always provided borrowers with the option to contact us at any point during a current tax year if they believe that have over-repaid their student loans. Since April 2017, where a borrower contacts SLC where they believe that they have paid off their student loan, SLC has been able to contact HMRC to check the latest PAYE student loan deduction information through the Real Time Information (“RTI”) submitted by employers. Once we validate the information with HMRC, SLC will issue a Stop file to HRMC, who will then send a Stop Notice to the employer. SLC will then arrange a refund of the overrepayment in accordance with the provisions of regulation 15 of the 2009 Repayment Regulations.
SLC and HMRC are working together to share repayment information more frequently. From April 2019 HMRC will send SLC student loan repayment information as reported by employers on a weekly basis. For customers who are paid monthly, that means the information will be transferred once a month. There will be a period of change while SLC receives and processes the annual repayment information for tax year 2018/2019 before applying the in-year repayments received for tax year 2019/2020.
Borrowers can also view their balance online at any time (link available through https://www.gov.uk/repaying-your-student-loan/how-you-repay). The repayment website calculates the interest due and provides a final balance so a borrower can choose to make a partial or full repayment to SLC.