5. Mr O complains the SLC refused to follow the IA’s recommendations on how he might repay his loan. He also complains the SLC delayed for four years in informing him he had an outstanding overpayment debt.
6. Mr O tells us the debt came as a shock, and the refusal to follow the IA’s recommendations is impacting on him financially and causing him stress.
7. Mr O would like the SLC to follow the IA’s recommendations.
8. When Mr O’s 2017/18 academic year application was first assessed, he received a Maintenance Loan award of £8,520. This was to support him over the entire academic year. He received the first instalment of £2,811.60 on 20 September 2017, once his university had confirmed his attendance on the course.
9. In October 2017, Mr O told the SLC he would be suspending his studies. On 15 November 2017, Mr O’s university notified the SLC he had done so on 11 October 2017.
10. As explained on gov.uk, when a student suspends their studies, the SLC needs to recalculate their loan entitlement on a pro-rata basis, providing support only for the days when the student attended. The SLC reassessed and then reduced Mr O’s loan to £757. As the SLC had already paid him £2,811.60, this resulted in an overpayment of £2,054.60.
11. Mr O’s university first told the SLC it was expecting him to return to his studies in September 2018. In such situations, the SLC will look to recover any overpayments from future support. However, Mr O then withdrew from his course, and his university failed to notify the SLC. Due to this, the recovery process only started once Mr O’s original course completion date had passed, in June 2020. His university then notified the SLC he had withdrawn in November 2017.
12. The Repayment Recoveries Department (RRD) deals with student loan overpayments. The RRD was closed between March 2020 and January 2021, during the COVID-19 pandemic. As a result, Mr O’s overpayment was placed on hold until the RRD reopened. This means the SLC did not notify Mr O of the overpayment until August 2021.
13. Responding to the news of his overpayment, Mr O complained to the SLC in August 2021. He said he had been told he would not have to repay anything until he was earning over the relevant repayment threshold. His complaint was not upheld.
Mr O asked the IA to conduct an independent review. The IA said the SLC had not properly considered his request. It awarded him financial compensation and said the SLC should let him repay the loan under the terms of the original agreement. The Department for Education (DfE, which sponsors the SLC) dismissed the IA’s recommendations, so Mr O brought his complaint to us.
16. When we consider a complaint, we look at whether there are signs the organisation has got something wrong. We do this by comparing what should have happened with what did happen. Having followed this process, we found no signs anything in Mr O’s complaint to us went wrong.
The SLC dismissed the IA's recommendations
17. Mr O was pleased the IA had made recommendations to the SLC he felt were fair and gave him the outcome he wanted. He was then very disappointed to hear the SLC would not carry out those recommendations.
18. We looked at the IA’s report and, firstly, its consideration of whether Mr O should repay the overpayment:
‘Recovery of overpayments is dealt with at Regulation 119 of the Education (Student Support) Regulations 2011 (as amended). It states:
119.— Overpayments of support payable under Part 5 or Part 6
(10) Any overpayment of a loan for living costs or a long courses loan in respect of any academic year is recoverable by the Secretary of State from the student to whom the payment was made.
(11) The methods of recovery are—
(a) subtracting the overpayment from any kind of grant or loan payable to the student from time to time pursuant to regulations made by the Secretary of State under section 22 of the 1998 Act;
(b) requiring the student to repay the loan in accordance with regulations made under section 22 of the 1998 Act;
(c) taking such other action for the recovery of an overpayment as is available to the Secretary of State.
There is therefore provision for the overpayment to be repaid in accordance with the Education (Student Loans) (Repayment) Regulations 2009, (as amended) as these are regulations made under section 22 of the Teaching and Higher Education Act 1998. Regulation 44 of the Repayment makes provision for repayment at 9% of earnings over the repayment threshold.
SLC has not given Mr O this option, despite him expressly requesting it. Whilst SLC’s usual practice may be to recover overpayments quickly, rather than wait for income contingent recovery, which is not unreasonable given that this is public money, it is not the only option. In my view given Mr O’s express request, in view of his current financial circumstances, SLC should, as a minimum have given consideration to this, as it is an option. Failing to do so was in my view unreasonable, and I have no reason to doubt that it has caused Mr O unnecessary anxiety as he states.’
19. As we can see, the IA recommended the SLC reconsider Mr O’s request.
20. We asked the SLC to explain if the DfE appeared to have considered this option before deciding it was not appropriate in this case. If it had considered this option, we asked, was this in response to the IA’s recommendation?
21. The SLC told us the DfE had considered this option and explained its decision to Mr O in its letter to him of 31 May 2022 from the SLC chief executive officer. We can see that letter says:
‘The SLC had been advised prior to this case that an overpayment of loan for living costs can be repaid in accordance with the Repayment Regulations (i.e. via Income Contingent Repayments (ICR)) where the overpayment has occurred due to SLC error only. In Mr O’s case, his loan overpayment occurred because he suspended his studies, not as a result of any SLC error. He was therefore correctly advised on the options available to him as regards recovery of the overpayment.’
22. We then asked the SLC to clarify the guidance the DfE used to support its decision. The SLC referred us to the Terms of the loan and gave us a copy of ‘Overpayments – improvements for collection processes’ which says:
‘6. Recovery after student has left the course
The borrower should make repayments directly to SLC as soon as they have left their course and for these repayments to continue, even though the borrower may also be making repayments through the tax system.
If the borrower begins to make repayments through the taxation system or through the overseas system, they can ask for their overpayments repayments to be amended but would need to provide proof of hardship.
The policy intent for this is overpayment is recovered as a matter of urgency and priority, in a manner that does not put the borrower into hardship. The standard loan recovery mechanism defined in the repayment regs is unaffected and that overpayment recovery continues in parallel until fully recovered, whether a borrower is above the normal loan repayment threshold or not.’
23. As we can see, the policy explains the borrower need not meet the normal loan repayment threshold (the income level at which a loan must start being repaid) before collection can be made, unless evidence shows it would cause hardship to the borrower.
24. In an email to Mr O’s MP dated 13 December 2022, the SLC said it would ‘continue to attempt to discuss the repayment with Mr O in an effort to agree a mutually acceptable repayment arrangement which takes into consideration his circumstance’.
25. This shows us the SLC acted in line with our Principles, which say, ‘Public bodies should treat people with sensitivity, bearing in mind their individual needs, and respond flexibly to the circumstances of the case’.
26. As the SLC followed its own policy, and as it made clear it would explore any hardship with Mr O, we cannot see any signs it was at fault.
The SLC delayed for four years in informing Mr O of his outstanding overpayment debt
27. Mr O signed up to a university degree course starting in September 2017 and was due to complete it in June 2020. The records show Mr O contacted the SLC by telephone on 11 October 2017 to ask about transferring to another course. On 6 November 2017, he then rang the SLC to report he had suspended his studies.
28. On 18 October 2017, Mr O’s university sent a Change of Circumstance (CoC) form to the SLC saying he was transferring to a different course. Mr O told us he soon decided it was not the right move for him at that time.
29. Two further CoC forms were sent on 6 November and 15 November, respectively. Both stated Mr O had suspended his studies and the agreed return date was 1 September 2018.
30. The SLC wrote to Mr O at his university address on 14 December 2017 to tell him what happens when a student suspends their studies and how the student finance is recalculated. It confirmed if the student has been overpaid, the SLC will contact them about repayment. The university returned this letter to the SLC stating Mr O was no longer at that address.
31. The SLC system contains evidence of a letter about an overpayment, written to Mr O on 18 December 2017 at his university address. However, there is no evidence this letter was sent, and we cannot determine whether this happened or not.
32. When the university returned the letter, the SLC updated Mr O’s primary contact address on its system, from his university address to his home address. This happened on 25 January 2018. Then, the SLC resent the letter that had gone to the university address to Mr O’s home address.
33. The next contact from the SLC to Mr O appears to be a letter dated 3 November 2020. This is known as the ‘Repayment of your student loan’ letter. It outlines the criteria for what happens in the coming April (the next financial year) depending on whether the student meets the income threshold for repayment or not.
Almost a year later, on 3 August 2021, the SLC told Mr O by letter he had to repay an overpayment of £2,054.60. On receiving this letter, Mr O called the SLC on 6 August 2021 (we have listened to the recordings of both that call and the following one). He explained he did not understand where this amount had come from.
34. The call handler explained how the amount had been calculated. Mr O accepted it was due but noted he did not meet the earnings threshold. He said as far as he was aware, SLC loans need not start being repaid until the borrower passes the earnings threshold.
35. Mr O asked to speak with a manager as he could not understand the reason for the SLC’s delay in informing him about the debt. He explained to the manager he was not able to start repaying the debt as he had recently been made redundant. It was agreed Mr O could take some time to work out his finances and what he could afford to pay. He called back later the same day and explained even a small amount would cause him difficulties. He asked if he could start repaying once he reached the income threshold.
36. The SLC told Mr O they would put a hold on his account until 5 October 2021 to allow him more time to work out his finances and what he could afford to pay. Mr O agreed to revert to the SLC on that date. In the meantime, he went on to lodge a complaint.
We examined the complaint communications and the evidence from Mr O’s time at university. In those communications, the SLC explained why it had not issued the overpayment letter sooner:
o the SLC was not aware Mr O had withdrawn from his studies, as the university had not told it this had happened o the RRD (which deals with overpayments) was closed for a long period due to COVID-19.
37. In the first instance, we can see the university only told the SLC Mr O had suspended his studies but was expected to return. There is no evidence it said Mr O had withdrawn. This caused the SLC not to send out any updates until after Mr O would have completed his course of study, in June 2020.
38. The SLC told us it was not processing overpayment repayments at that time. This was because during much of 2020 and early 2021 it was focusing on loan applications, and SLC staff were working in lockdown and then post-lockdown conditions. All this caused a backlog in the processing of overpayments, meaning the SLC could not inform Mr O of his outstanding debt until August 2021.
39. We can see no sign of an avoidable delay on the part of the SLC. It also appears to have acted in line with our Principles, which say, ‘Public bodies should behave helpfully, dealing with people promptly, within reasonable timescales and within any published time limits’.
40. We understand the overpayment letter dated 3 August 2021 came as a surprise to Mr O. We can also see it would have been just as unwelcome a surprise had it been issued one year earlier (roughly the earliest it could have been issued).
41. We accept it is often distressing to learn of a debt long after it becomes due and we have given these matters careful thought. We are now satisfied the circumstances that led to the delay were outside the SLC’s control, and there are no signs the SLC was at fault. We will therefore take no further action.
1. The Parliamentary and Health Service Ombudsman has carefully considered Mr O’s complaint about the Student Loans Company (SLC). Having done this, we have decided not to consider the complaint further.
2. To reach this decision, we reviewed the information Mr O provided and we had a telephone call with him about his complaint. We were sorry to hear of the frustration and worry he describes from his ongoing conversations with the SLC about the repayment terms of his student loan.
3. We can see the SLC considered the recommendations of the Independent Assessor (IA). We have not seen anything to suggest it made mistakes in its consideration and later decision. We also considered the reasons for the delay in informing Mr O of his outstanding debt. In our view, those reasons were not due to SLC failings.
4. We will explain the factors we considered in our primary investigation of his complaint.