Thousands of college graduates are in line for reimbursements following an accidental increase in their student loan balances. The Student Loans Company (SLC) has identified two issues impacting some plan 2 loans, which pertain to undergraduate courses between 2012 and 2022.

One issue stemmed from a technical glitch where incorrect income details were used in interest calculations. The other problem arose from an HMRC income reporting error affecting individuals with both PAYE and self-assessment incomes.

These errors have impacted a total of 71,000 people, with 41,000 experiencing an erroneous increase in their loan balances and 30,000 witnessing a decrease. SLC has assured affected customers that refunds will be issued for overpayments.

For those whose balances decreased without overpayment, adjustments will be made to reflect the accurate interest without refunds. If the loan has already been fully repaid, there will be no requirement to restart repayments.

SLC has rectified both errors, with balance corrections reflected in upcoming annual statements, expected before the end of September. Approximately 1.3% of current plan 2 loans were affected by these issues.

An SLC spokesperson stated that impacted customers need not take any action, as regular repayment amounts will remain unchanged. SLC and HMRC expressed regret over the inconvenience caused.

In related news, interest rate caps have been announced for plan 2 and plan 3 student loans for the 2026/27 academic year. Plan 2 loans currently attract a 6.2% interest rate during studies, based on the Retail Price Index plus 3%.

After completing studies, interest rates are income-dependent, with high earners subject to RPI plus up to 3%. Starting September, interest rates will be capped at a maximum of 6% to address concerns about escalating student debts.

Many students have voiced frustration over their loans growing annually despite regular repayments, attributed to the existing interest rate terms.