A significant number of borrowers of Plan 2 student loans have been affected by errors in the application of interest charges, prompting widespread frustration and complaints. According to the Student Loans Company (SLC), around 71,000 customers experienced incorrect interest calculations due to two technical mistakes involving the SLC and HM Revenue & Customs (HMRC).
One borrower, Philip, who requested anonymity, described his ordeal, saying he had spent numerous days attempting to resolve discrepancies in his loan balance despite having repaid over £82,000. The SLC acknowledged the error, apologized for the poor service, and confirmed Philip would not have to pay the erroneous outstanding balance. The agency also committed to refunding his £492 overpayment and providing a £100 goodwill payment. The SLC reiterated that affected customers generally do not need to take further action.
Beyond this case, other borrowers have reported being given conflicting settlement figures and facing prolonged resolution times for relatively straightforward issues. The SLC reported that it supports approximately 7.4 million borrowers and received 4,248 repayment-related complaints last year, with only 27.8% upheld—marking a decrease from the previous year. It noted that most complaints relate to government policy rather than SLC service itself.
The complexity of the repayment process, particularly the application of interest rates for Plan 2 loans, partly explains these issues. Interest involves both fixed and income-related components, requiring final balances to be adjusted after year-end income assessments. Borrowers who repay via self-assessment must wait for HMRC income data to be processed before receiving final settlement figures.
In response to ongoing difficulties, the SLC is reviewing its complaints and appeals procedures and recruiting four additional independent complaints assessors as part of a broader transformation programme.
Meanwhile, critics highlight systemic problems within the student loan system. Oliver Gardner, founder of the Rethink Repayment campaign, described the complications as indicative of a larger disregard for graduates, asserting that the government continues to alter repayment terms while failing to provide protections typical of commercial lenders. With expectations low for a reversal of the freeze on repayment thresholds in the upcoming Budget, Gardner urged improvements to prevent borrowers from facing excessive challenges in repaying their loans.
Amid growing confusion, many borrowers have turned to artificial intelligence chatbots for assistance in modeling early repayment options for Plan 2 loans. Martin Lewis, founder of Money Saving Expert, has developed an AI-based tool that estimates repayment scenarios based on individual data. However, he cautions that these projections remain uncertain, influenced by variables such as future earnings, inflation, interest rates, and government policy changes. The suitability of early repayment depends on the amount owed and borrowers’ confidence in sustaining higher incomes over time.