Graduates who have paid off their loans are continuing to have money taken off out of their pay packets by the Student Loans Company. So what is the SLC and what is going on with student debt?

How big is the SLC?

The total student loan debt in the UK has risen to more than £100bn for the first time, and is expected to hit £330bn by the middle of the century. The average loan on “entry into repayment” (ie, after graduation) is £32,220 in England and £11,740 in Scotland. In February, the government began its controversial sale of the student loan book, expected to recoup £12bn for the exchequer, and assured graduates that they will not have to pay more.

Who runs it?

Boardroom shenanigans bedevil it. It has gone through three bosses in the space of just 20 months, adding to the sense of an organisation in crisis. Its £200,000-a-year chief executive, Steve Lamey, was suspended last month. Legally, it is owned by the Department for Education in England, and its equivalents in Scotland, Wales and Northern Ireland, suggesting that Justine Greening, the education secretary, has lead responsibility. But repayments are governed by the Department for Business, Innovation and Skills, which is headed by Greg Clark, the secretary of state, while a Transformation Programme that began in 2013 was a result of collaboration with BIS, the Cabinet Office and the Treasury. . It has 2,600 staff based in Glasgow, Darlington and Llandudno Junction. Hinduja Global Solutions runs outsourced contact centres for SLC that it claims provide “best in class” service.

What annoys students most?

Probably that the cost of going to university will take a lifetime to pay off. Average debt for the poorest families is expected to hit £53,000 soon. Specific gripes focus around interest rates, penalties, admin and retrospective charges. Some are the responsibility of the SLC, but others are policies forced on it by government.

What’s the issue with interest rates?

Put bluntly, it is the prospect of having to pay 6% interest on student loans when the Bank of England base rate is 0.25% and when mortgages, even for first-time buyers, are 2-3% interest. Others complain they were not told what they were signing up to. Students who started in 2012/13 are charged interest based on the level of the retail prices index every March. At the moment new starters and current students are charged 4.6% – the March 2016 RPI figure of 1.6%, plus 3%. But, from September, this will rise to 6.1% – that’s the March 2017 figure of 3.1%, plus 3%. Note: the amount you end up paying depends on your earnings; if it’s less than £21,000, the interest remains at RPI, rising to RPI-plus 3% once you earn over £41,000. If an individual started university between 1998 and 2011, the rate they are currently being charged is 1.25%, and will stay at this after September. This is because it is based on whichever is the lowest out of RPI or the Bank of England base rate – currently 0.25% – plus 1%, says Save the Student.

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What penalties does it charge?

Fines that were introduced in April 2016 have provoked uproar. Many students claim they have been unfairly penalised. Anyone with a student loan must tell the SLC if they go abroad for three months or more – whether earning or not. They are also required to show how they are funding the trip. Failure to do so counts as non-compliance and the SLC will apply a penalty charge until the student provides the information.

What are the gripes about admin?

The most common complaint is that it is a “bureaucratic nightmare”.



Can it make retrospective changes?

It already has. For students who started university in 2012, the government said that the £21,000 level at which they would start repaying would rise annually with average earnings from 2017. Last year it backtracked, with the £21,000 threshold frozen until at least 2021. As many students argue, no conventional finance company would be able to change the terms and conditions after a loan had been taken out.