University graduates will no longer be overcharged when repaying their student loans, as tax authorities have now agreed to share their data with the Students Loan Company (SLC).
Papers released under the new budget on Wednesday 22 November say that by 2019 HM Revenue & Customs (HMRC) and the SLC will set up a system to share data, so that repayments will automatically stop when the loan has been repaid.
Between 2015-16, as many as 86,000 graduates overpaid on their student loan, each by an average of £592.
This is because the SLC only receives updates once a year on what students owe from HMRC, meaning the information is out of date, causing students to pay too much, and later reclaim their money.
Before the budget was released, universities minister, Jo Johnson, told the Commons that the government had realised this was a problem that needed to be addressed. He said: “We do take the issue of overpayments extremely seriously.
“We do want to see close and effective cooperation between HMRC and SLC, so that we avoid the risk to the extent we possibly can of students overpaying when they repay.”
Former head of the SLC, Steve Lamey, had previously asked for HMRC to share tax information to eliminate £51m in annual overpayments. He was told this was not possible, and has since been dismissed from his role after speaking out about the organisation’s problems. Many have seen the new budget as an attempt
by the Conservative government to attract younger voters, primarily students. Other changes included extending the railcard to 26-30 year olds, and investing £350m to immediately address problems in education this winter. Last month, Theresa May promised to raise the student loan repayment threshold from £21,000 to £25,000 and it was announced tuition fees would be frozen at £9,250 until at least 2019.