Consumer finance expert Martin Lewis has accused the Student Loans Company (SLC) of making an “irresponsible and dangerous” change to its website.
The SLC, which recently moved its website from SLC.co.uk to the Gov.uk domain, now offers university leavers ‘quick repayment options’, and tells students about the amount of ‘debt they owe’ when they log in to the website.
Mr Lewis says that this tool gives graduates a “damaging, demoralising” picture of their debts, and exaggerates the status of their outstanding loans.
He said that, “far from taking on board widespread concerns that student loans information is misleading and promotes financially poor decisions by graduates, the SLC has in some places doubled down on the opposite”.
The founder of the website Moneysavingexpert.com added that: “The first thing university leavers see when they log in, in a large font, is the amount of ‘debt’ they owe.
“This is demoralising, damaging and dangerous.
“Owing £30,000, £300,000 or £3 million makes no difference to your annual payments, which are set at 9% of everything you earn over a threshold (currently £26,575 per year for Plan 2 loans and £19,390 for Plan 1).
“The only impact the amount of debt has is whether you clear it or not within the 30 years before it wipes; and it’s predicted that vast majority, 83%, of university leavers won’t be earning enough that their repayments clear it in full.
“They’ll keep repaying it for the whole 30 years, like an additional tax – so the debt amount for them is pretty irrelevant.”
Far from taking on board widespread concerns that student loans information is misleading and promotes financially poor decisions by graduates, the SLC has in some places doubled down on the opposite.
– Martin Lewis
Mr Lewis warned that the new format of the website “makes many think they should overpay like a normal debt”.
He said: “Overpaying is a total waste of money. So I was flabbergasted to see they went live with a ‘quick repayment’ system, without detailed warnings, cautions and explanation.
“That’s irresponsible and dangerous beyond belief. It’s doubling down on the damage.”
The SLC said that the online repayment service is designed “to make it easier for graduates to access their account, manage their student loan and to avoid over-repayment”.
David Wallace, SLC’s deputy chief executive, said the new website was the result of consultation with its users, who wanted more information about their outstanding balance, and two meetings with Lewis’ organisation.
He said: “We think we’ve done a really good job here for customers, the feedback we’ve had was good. So we were really disappointed at the reaction from Moneysavingexpert.com.
“We’re providing the balances that the customers have asked for, and it certainly hasn’t put off any prospective students from taking out student funding for higher education. So we think we are doing the decent thing for customers by listening to them and responding.”