Thousands of graduates in England and Wales are set to receive refunds after errors in the calculation of some Plan 2 student loan balances were identified by the Student Loans Company (SLC) and HM Revenue and Customs (HMRC).
The issue affects a relatively small proportion of borrowers, but it has prompted corrections to loan accounts and refunds for those who paid back more than they should have after their balances were wrongly increased.
Plan 2 loans apply to students who began undergraduate courses between 2012 and 2022, with repayments generally triggered once earnings exceed a specified threshold. According to information released by the SLC and HMRC, around 71,000 current Plan 2 customers were affected by technical problems linked to interest calculations. The organisations have said that borrowers do not need to take any action and that regular repayment amounts will not change as a result of the corrections.
Two Errors Affected More than 70,000 Borrowers
According to the Student Loans Company, two separate issues led to incorrect interest being applied to some Plan 2 accounts. The first was a technical problem that resulted in the wrong income information being used when calculating interest. The second arose from an HMRC income-reporting error affecting borrowers who received income through both Pay As You Earn (PAYE) and Self Assessment.
The mistakes affected approximately 71,000 customers, representing around 1.3% of current Plan 2 borrowers. Of those, around 41,000 had balances that were incorrectly increased, while roughly 30,000 saw balances that were incorrectly reduced, according to reporting by the Mirror.
The SLC said it is contacting customers whose balances increased because of the errors. Any borrower who paid off more than they should have will receive a refund. The organisations also confirmed that people who have already repaid their loans in full will not be required to resume repayments.
In a statement, the SLC said: “We are contacting some Plan 2 customers to inform them we’re correcting their loan balance following technical issues which have now been resolved.” The organisation added that affected customers do not need to take any action and that standard repayment amounts will remain unchanged.
Corrections to Appear before October
According to HMRC and the SLC, both issues have now been fixed and interest will be calculated correctly going forward. Changes to affected accounts will be reflected in borrowers’ next annual statements, which are expected to be issued before October. The SLC has stated that customers whose balances increased will be contacted directly regarding the corrections.
The announcement comes amid continued discussion about Plan 2 student loans and the way interest is applied to outstanding balances. Money expert Martin Lewis previously criticised aspects of the system, particularly the freezing of repayment thresholds and the way interest rates are linked to earnings.
Writing for MoneySavingExpert, Lewis said that the earnings threshold at which borrowers begin paying the highest rate of interest has not kept pace with inflation. He also noted that the repayment threshold for Plan 2 borrowers is set to remain at £29,385 from April 2027 following decisions announced in the Autumn 2025 Budget.
Separately, the SLC announced earlier this year that interest rates on Plan 2 and Plan 3 student loans will be capped at 6% for the 2026/27 academic year. According to the SLC, current Plan 2 loans carry an interest rate of 6.2% during study, based on the Retail Price Index plus 3%, with post-study rates determined by earnings.
