Company responsible says students end up paying more due to the nature of the scheme
Graduates based in Northern Ireland have overpaid their student loans by more than £10m in the last six years.
It comes after the Belfast Telegraph revealed how some students here are leaving university with debts of up to £100,000.
According to the Student Loans Company (SLC), student loan over-repayments happen because of the nature of the loan repayment scheme, known as Income Contingent Repayment (ICR).
Up until April 2019, the SLC received student loan repayment information each year from HMRC, and as a result of this process some borrowers nearing the end of their repayments might overpay, the SLC said.
Since April 2019, HMRC has sent SLC student loan repayment information as reported by employers on a weekly basis, known as More Frequent Data Sharing, which the SLC says has helped reduce overpayments, but they still might happen unless a borrower switches to the direct debit scheme when eligible to do so.
According to the latest figures, in the 2020/21 financial year, a total of 2,724 graduates from Northern Ireland overpaid in their student loan repayments to the tune of £1.26m. The average overpayment per graduate was £450.
Figures also show 1,619 graduates received refunds in 2020/21 and 1,105 graduates were awaiting a refund, as of January 31 this year. Since 2015/16, overpayments from NI students have totalled £10,268,822. The total amount of overpayments has been falling in recent years, from a high of just over £2m in 2016/17.
The SLC said: "Over recent years, a number of initiatives have been introduced to reduce over-repayments and improve the repayment process for SLC customers including introduction of the Online Repayment Service, automatic refunds and encouraging uptake of the direct debit scheme.
"The frequency of data received from HMRC has also increased from annually to weekly. Additionally, further campaigns have been run to contact customers who have over-repaid, advising them to claim their refund. Therefore, these changes have reduced over-repayments and the decrease reported reflects this."
Ellen Fearon of the student body NUS-USI said the SLC needs to ensure it places "as much emphasis on locating graduates who have over-repaid as it would tracking down those it believes owe it money”.
“In many cases, the SLC will no longer have accurate contact information to alert people they are owed money, so we would encourage all those who have repaid their loans to consider getting in touch with SLC to see if they are eligible for a refund and ensure their details on record are correct," she said.
“It is also important for graduates to check their payslips and student loan statements to understand when the loan expires, which can address any overpayment. Ultimately, the SLC must reduce the incidence of overpayments by updating its systems and how it works with HMRC.”
Alliance Party economy spokesperson Stewart Dickson added: "It is challenging enough for graduates to repay student loans without some people making overpayments. Better systems should be in place to prevent this from happening in the first place. Refunds should be made quickly and I would encourage former students to check repayment schedules once they begin.”
The SLC said: “We want to make it as easy as possible for customers in repayment to manage their student loan accounts and over the last two years we have made a number of improvements to help customers avoid over repaying.
"Our Prevent Over Repayment (POR) scheme enables customers to switch to Direct Debit in the final years of payment as over repaying is entirely avoidable. In addition, our new Online Repayment Service (ORS) gives customers much more control over their repayment journey.”
The news comes after figures obtained by the Belfast Telegraph showed that the level of student debt for NI graduates is topping £100,000 in some cases. One person from here has a student debt balance of more than £100,000, while over 4,000 others have debts of between £50,000 and £99,000.
Figures released via a Freedom of Information request show the top five highest student loan balances of students from Northern Ireland are £100,781; £96,218; £93,719; £91,542; and £91,074.