Student Loans Company (SLC)

7. Mrs R complains about the ongoing problems she has experienced with the SLC from the end of 2019. She says it still has not written off her ALL loan, which was due to happen after she completed her midwifery graduate degree course in September 2019.

8. She says the monthly deductions from her salary are being split between her ALL and her graduate loan, so she is effectively paying off her graduate loan at a slower rate and accumulating more interest. She says the ALL is also accumulating interest.

9. Mrs R tells us she has experienced and continues to experience stress and frustration because of SLC’s continued failure to address the system error which prevents it writing off her ALL, and lack of any plan to address this or to otherwise compensate her.

10. She wants SLC to refund all payments made to her ALL, including interest, and to write off the loan.

11. Mrs R was approved for an ALL in July 2013 to fund the tuition fees for a one-year access to higher education diploma (Access to HE Diploma) in health. The total loan was £2395.

12. An Access to HE Diploma gives students access to a Higher Education (HE) course such as a graduate degree course where they do not otherwise have the relevant qualifications, such as A-levels. An ALL helps with the costs of the Access to HE Diploma course at a college or training provider in England.

13. If a student who has received an ALL towards an Access to HE Diploma subsequently goes on to study a designated HE course, the outstanding balance of the ALL is cancelled on the date they complete the HE course.

14. The law is set out in regulation 19(3)(f) of the Education (Student Loans) (Repayment) Regulations 2009, as amended by regulation 5 of the Education (Student Loans) (Repayment) (Amendment) Regulations 2013 (the Regulations). It says, ‘the Authority or loan purchaser must cancel the borrower’s liability to repay the student loan […] in the case of post-2012 student loans for Access to HE Diplomas where a borrower has achieved at least one Access to HE Diploma and the Authority is satisfied that the borrower, who was an eligible borrower, completes a designated course’.

15. Mrs R completed the Access to HE Diploma and subsequently started a graduate degree in midwifery, meeting the requirements of a designated HE course, in the academic year 2015/16. She completed her degree in September 2019. As such, she was then eligible for the ALL to be written off in full, a matter on which all parties agree.

16. She contacted the SLC towards the end of 2019 to enquire when her ALL would be written off. SLC told her this would happen automatically and it would contact her once it was done.

17. She says SLC then contacted her on 25 June 2020 to advise her she was due a refund of any ALL repayments already taken from her salary. The SLC said this was because her ALL was due to be written off and that it was reviewing the matter. It processed a refund of £62 in July 2020.

18. Mrs R says after she received the refund, despite already recognising that she should not be responsible for making any further payments, the SLC continued to deduct payments from her salary towards the ALL and also added interest. From November 2020, the SLC also deducted payments towards her graduate loan, which she does not dispute she is liable to repay but which she says caused her difficulties as she was effectively making two sets of payments when only one was needed.

19. The SLC contacted her again on 3 May 2021 and confirmed she was eligible for the write-off of the ALL, although this had still not happened and deductions were still being made. The SLC advised her all repayments would be refunded and told her to get back in touch in six months if she had not heard anything further.

20. Mrs R had not heard anything after six months and so contacted the SLC again in November 2021. By now, a year and five months had elapsed since SLC had first made her aware of the issue. She says she repeatedly called the SLC to chase up the progress of the loan write-off between November 2021 and May 2022. The SLC continued to advise her it was looking into the matter.

21. On 5 May 2022 she complained to the SLC. The SLC responded on 9 June 2022. The response: • confirmed her ALL was eligible to be written off • advised SLC was not able to perform the write-off due to system issues which involved ‘removing the repayments made towards her ALL and transferring these on to her degree loan to write off the full amount of the ALL’ • advised it could not provide a timescale as to when the system fix would be resolved • apologised and offered an ex-gratia payment of £25

22. Mrs R accepted the payment initially but said she did not feel this addressed her complaint. SLC confirmed on 25 July 2022 that it was hoping for a system fix by the end of August 2023, but on 21 August 2022 she referred the complaint to the Independent Assessor (IA) for the Department for Education (DfE).

23. The IA provided their report on 9 December 2022. The report recommended SLC increase the ex- gratia payment to £200. It accepted there was a system issue which the SLC was trying to resolve but said the SLC was obliged to identify what was wrong, keep customers informed and put effective workarounds in place as soon as possible. It found that the SLC had failed to do so.

24. Mrs R complained to her MP on 4 January 2023.

28. Mrs R’s ALL was due to be cancelled on the date she completed her HE course in September 2019. In Mrs R’s case the ALL would be cancelled in full. This is because she had not been required to make any repayments whilst she was completing her HE course and she was now eligible for it to be written off.

29. The cancellation did not happen and in July 2020 SLC refunded Mrs R £62. It has confirmed the refund was for repayments taken from her salary and paid to her ALL account between the due date of cancellation in September 2019 and April 2020. The latter is the date her degree loan went into repayment, although her salary did not reach the required threshold until November 2020.

30. SLC tells us that from April 2020, any repayments should only have gone into her degree loan account since her ALL account had effectively been cancelled from September 2019, although action had not been taken to make this happen.

31. Instead, repayments from her salary were split between her degree loan and her ALL accounts and this prevented the cancellation of the ALL. SLC explains this is because for the cancellation to happen, SLC needed to initially transfer all of the payments, which had been incorrectly applied to the ALL account, over to the degree loan account and it did not have a function within the payment system which would action this procedure.

32. Therefore, we can see this issue specifically applies where customers enter repayment with a subsequent loan whilst having an ALL already in repayment which has become eligible for cancellation.

33. SLC explained that, at the time of Mrs R’s complaint, it had only been able to manually transfer the payments from the cancelled account to the subsequent loan account for customers in the same situation as Mrs R and the level of manual intervention required was no longer sustainable. This had resulted in a backlog of around 4000 customers who have not received the cancellation to which they are entitled.

34. We can see that, in failing to action the cancellation of Mrs R’s ALL, and do so in a timely manner, SLC has not complied with the requirements of the Regulations.

35. We also consider that it has not acted in line with our Principles of Good Administration (our Principles). Our Principles set out that all public organisations should comply with the law and act according to their statutory powers and duties and any other rules governing the service they provide. They should follow their own policy and procedural guidance, whether published or internal.

36. The evidence available indicates SLC has not complied with the Regulations or our Principles and this a clear service failure. While we recognise that SLC has experienced capacity issues which it explains affected its ability to manually transfer the ALL payments to the degree loan account, it is clear that this is a widespread issue that affects a large number of individuals and it has been ongoing for several years. As such, SLC has had opportunity to explore how to resolve or mitigate the capacity issue to the benefit of its customers over a long period, but we have not seen evidence that it has done so in a timely manner.

37. Essentially, we agree with the DfE’s IA in their findings that, despite any capacity issues which are outside of the SLC’s control, it still has a responsibility to put in place effective workarounds and be open and transparent with those affected as to what it will do and when. We are aware it has now put in place a plan going forward, which we consider further below.

Impact 38. We have next considered the impact of the service failure we have identified.

39. Since Mrs R’s salary reached the relevant threshold in November 2020, SLC has taken monthly deductions from her salary and split them between her ALL and her graduate loan account. She is very concerned she has therefore been paying towards a loan which she technically no longer owes and paying off her graduate loan at a slower rate, which she has been very worried means she has accumulated more interest since this date. She has also been very worried she has also been accumulating interest on her ALL.

40. This has caused her considerable frustration and upset. She has been trying to resolve the matter with SLC since September 2019 and has been told on several occasions that there is no expected date for a resolution of the problem. We can see that this delay and the lack of information about a clear plan forward has significantly increased her feelings of exasperation.

41. We are pleased to see that SLC advised her by letter on 5 September 2023 that it had at that point cancelled her ALL. However, although it advised her of the amount of the original loan and the amount including interest which had been written off, it left her confused and anxious about the incurred interest on her graduate loan account and she did not understand that the payments she had made into her ALL account would be transferred to her graduate loan account.

42. The SLC tells us that the failure to cancel the ALL has not resulted in any financial impact on Mrs R. This is because repayments for the majority of loans are set at nine percent of a customer’s income once it meets a specific threshold. In Mrs R’s case the nine percent payment was split between the two accounts so she was not paying more than she would have done if the ALL had been cancelled correctly.

43. The SLC has since explained that the transfer of a credit balance from one account to another will not impact the accrued interest. This is because the credit balance on the ALL account accrues credit interest at the same rate as the debt interest accrued on the graduate loan account. Therefore, the credit interest will offset the debit interest.

44. It provided an example to illustrate what happens. If debit interest of £10 is applied to the graduate loan account each month and at the same time credit interest of £3 is applied to the ALL (because the ALL balance is less) then the overall interest charged is £7. When the balance on one account is moved over therefore the interest will automatically correctly adjust.

45. We can therefore see that Mrs R was not financially out of pocket. However, we recognise that she nonetheless did not have control over what was happening with her income and was very unclear about what this all might mean for her finances. She was anxious about the increasing interest on her ALL account and the impact on the interest applied to her graduate loan account due to the slower rate of payment. She was left with concerns about there being a financial impact on her at some point in the future for a period of four years. We can also see that the letter she received four years after the due date of cancellation did not resolve all of her worries.

46. SLC told us in September 2023 that this issue also affects approximately 4000 other student loan accounts in England. Given this, we consider that it is likely that the issue has had a wider impact on a potentially significant number of other users of SLC’s service.

Remedy 47. We looked initially at what SLC has done to put right the impact on Mrs R and resolve the wider issue.

48. We understand that Mrs R remains concerned about the payments she has already made to the ALL account. We have explained that the 9% deductions from her salary were split between her ALL and graduate loan accounts. Therefore, the total amount she was paying was correct and any payments made to her ALL account will have been transferred back to the graduate loan account to restore the correct balance.

49. SLC has confirmed to us that it has now transferred the full outstanding balance of £657.80 to Mrs R’s undergraduate loan account.

50. We are pleased that SLC has completed the transfer of balance and hope this helps her to draw a line under the matter. However, having looked at the impact on Mrs R resulting from the errors we have identified, we consider that the payment of £200 is not sufficient to remedy the impact caused.

51. We note that SLC has described the impact on Mrs R as ‘negligible’ or only ‘frustration and inconvenience’. We do not consider this is an adequate assessment of the impact she has experienced. This is due to: • the time taken for the matter to be partially resolved • the lack of any clear information provided to Mrs R since September 2019 about what SLC was going to do and when

52. In September 2023, SLC advised that the resolution of the system issue preventing the cancellation of ALL outstanding balances for eligible customers would be resolved in two stages.

53. The implementation of phase one would ensure the cancellation of the ALL from the relevant date and phase two would action the transfer of the existing balance of payments to the ALL over to the subsequent loan account.

54. SLC advised the ‘delivery of the resolution will be carried out over a strategic period of time to ensure that the mitigation being implemented is offering the desired resolution. This means that all impacted customers will be placed into controlled batches to allow for continually monitoring of their accounts’.

55. Whilst we understand that the process has been concluded for Mrs R, we are not clear if phase one has been completed for the backlog of 4000 customers. We also do not know if there has been progress made on the implementation of phase two.

56. We requested an update from SLC and on 23 April 2024 it told us at the point it commenced the implementation of phase one, the backlog of affected students had increased to 5230 customers. Of these, SLC had cancelled the ALL of 3957 students. It explained that a further 1273 required additional analysis, for various reasons.

57. A further update from SLC dated 28 June 2024 advised us that there are still 1164 cases outstanding because they require additional analysis. Of these, SLC have identified what is required for 977 of these cases but they technically still remain outstanding, although we understand that they are close to being written off.

58. SLC tells us it intends to write off the remaining 187 within the next three to six months. It further explains that: • ‘85 will be written-off in due course when the script is next deployed’ • 102 self-funded their undergraduate course and so SLC do not hold the required graduation date to allow write-off using the current script. We understand that ‘SLC are currently working on amending the script’

59. We welcome the fact that SLC has now put in place a clear and transparent plan as to how it will resolve the issue. However, SLC has not advised us of the timescale for completing the above. It also has not provided any information regarding the implementation of phase two for the current backlog of customers, beyond advising that there is no requirement to move the repayments from the ALL account to the subsequent loan account since the customer is not adversely affected by the repayment showing on the ALL account. It tells us that ‘going forward, we believe ALL write offs will be carried out as and when they occur’. In the update from SLC dated 28 June 2024 it explained it now does not intend to proceed any of the outstanding cases to phase two. SLC has explained that this is ‘in part due to the manual resource requirements and the fact that the approach provides no material benefit to the customer’. It has also told us that SLC will continue to explore system enhancements to move the repayment information from the ALL to the undergraduate loans but due to limited resources that it is unable to provide a timescale for when this will happen.

60. We do not consider that this takes into account the frustration and confusion caused to users of the SLC’s service from lack of clarity about when the matter will be resolved in their case. While we understand there may ultimately be no financial loss to the individuals affected, it is clearly upsetting and frustrating to those individuals while the matter is ongoing, particularly if it is ongoing for a number of years. As such, we have made recommendations.

1. We have completed our investigation of Mrs R’s complaint about the Student Loans Company (SLC). We are sorry to hear about Mrs R’s difficulties in obtaining the cancellation of her Advanced Learner Loan (ALL). We understand this matter has been ongoing for a significant period of time.

2. Having considered the evidence available to us we can see the SLC failed to: • write off Mrs R’s ALL in September 2019 and further delayed doing so until September 2023 • transfer the outstanding balance from her ALL to her graduate loan account

3. We also consider there is a systemic failing here which has impacted on a significant number of other students.

4. We do not consider SLC has done enough to put right the impact of its errors on Mrs R, or to improve its services to prevent the risk of a similar impact on other students and therefore we have decided to uphold her complaint.

5. We recommend the SLC makes further service changes to ensure there is an effective plan in place to resolve the outstanding issues to customers affected and prevent the same issue arising in the future.

6. We also recommend a further financial remedy to put right the distress caused to Mrs R.

61. In considering our recommendations, we have referred to the UK Central Government complaint standards (Complaint Standards). These state that where poor service or maladministration has led to injustice or hardship, the organisation responsible should take steps to put things right.

62. The Complaint Standards say that public organisations should look for continuous improvement and should use the lessons learnt from complaints to make sure they do not repeat maladministration or poor service.

63. In line with this we recommend that within three months of the date of our final report the SLC write to Mrs R and provide an apology for the omission in providing a clear timeframe about before now.

64. Our Complaint Standards state that public organisations should put things right and, if possible, return the person affected to the position they would have been in if the poor service had not occurred. If that is not possible, they should compensate them appropriately.

65. To decide on a level of financial remedy, we review similar cases where the person has experienced similar injustice, along with our severity of injustice scale. This ensures that any recommendations we make are consistent and transparent for everyone who uses our service.

66. Following this review, we recommend that SLC pay Mrs R a further £200 in addition to the initial £200 it previously agreed, in recognition of the upset and frustration caused to her by the failings we have identified. It should do so within three months of the date of our final report. This payment is intended to put right the distress its failings have caused her.

67. We also recommend that within three month of the date of this report the SLC provides us with an action plan to explain how it will communicate clear timeframes for ALL write offs to any affected customers who have already raised the same problem or who do so in future. This action plan should include arrangements for updates to those affected who have raised concerns, and communication of any changes to a previously agreed time frame.