If you have a Plan 2 student loan, the good news is that you do not need to take any immediate action following the recent Student Loans Company technical issue.
The Student Loans Company (SLC) and HMRC have confirmed that around 71,000 borrowers were affected by incorrect interest calculations, resulting in some balances being overstated while others were understated.
Although account balances may be adjusted, regular repayment amounts will not change. Affected borrowers will be contacted directly, and anyone who has overpaid will receive a refund where applicable.
Key Highlights:
- Around 71,000 Plan 2 borrowers were affected.
- The issue impacted approximately 1.3% of current Plan 2 customers.
- Two technical errors led to incorrect interest calculations.
- Monthly repayment deductions will not change.
- Eligible borrowers who overpaid will receive refunds.
- Updated balances will appear in annual statements.
What Is the Student Loans Company Technical Issue Affecting Plan 2 Balances?
The Student Loans Company has confirmed that approximately 71,000 Plan 2 student loan customers were impacted by a technical issue that resulted in incorrect loan balances. This represents around 1.3% of current Plan 2 borrowers across the UK.
The problem relates specifically to how interest was calculated on certain accounts. As a result, some borrowers saw their balances increase when they should not have, while others had balances that were lower than they should have been.
Importantly, the issue does not affect repayment eligibility, loan ownership, or repayment thresholds. Instead, it concerns the interest applied to affected accounts over a period of time.
“Ensuring accurate interest calculations is critical because even small discrepancies can significantly affect long-term student loan balances and borrower confidence.” — Student Finance Policy Specialist
The SLC has stated that all identified technical issues have now been resolved and future interest calculations will be processed correctly.
Why Were Some Plan 2 Student Loan Balances Calculated Incorrectly?
The balance discrepancies were caused by two separate technical issues involving income data used to calculate student loan interest.
Incorrect Income Information Used for Interest
One issue arose because incorrect income information was used when calculating interest rates for some borrowers. Since Plan 2 interest rates can vary depending on earnings, inaccurate income records can place borrowers in the wrong interest band.
When this happens, the amount of interest added to a loan balance may be higher or lower than it should be.
HMRC PAYE and Self Assessment Reporting Error
A second issue involved HMRC reporting processes. This particularly affected individuals who received income through both PAYE employment and Self Assessment tax returns.
Because income information was not reported correctly in certain cases, some borrowers were assigned inaccurate earnings figures, leading to incorrect interest calculations.
Error Summary Table:
| Error Type | Cause | Impact |
| Income Data Issue | Incorrect earnings information used | Wrong interest applied |
| HMRC Reporting Error | PAYE and Self Assessment income mismatch | Incorrect interest bands assigned |
Both errors have now been corrected, and future calculations are expected to reflect accurate earnings information. This should prevent similar balance discrepancies going forward.
Who Is Affected by the Student Loans Company Balance Correction?
The issue primarily affects borrowers with Plan 2 student loans, which generally apply to students who started undergraduate courses between 2012 and 2022. The scale of the corrections varies depending on individual circumstances.
Affected Borrower Breakdown:
| Category | Number of Borrowers |
| Balance Increased Incorrectly | 41,000 |
| Balance Reduced Incorrectly | 30,000 |
| Total Affected | 71,000 |
Most Plan 2 borrowers are unaffected. If your account has been impacted, the SLC will contact you directly with details of the correction. The issue highlights the importance of accurate income and tax reporting for student loan repayments.
Will Your Student Loan Repayments or Monthly Deductions Change?
One of the most important points for borrowers is that repayment deductions will remain unchanged despite balance corrections. Student loan repayments under Plan 2 are based on earnings rather than the total outstanding balance.
This means your employer will continue deducting repayments through payroll in the normal way, provided your income remains above the repayment threshold.
What Stays the Same for Borrowers?
Regular payroll deductions will continue to operate exactly as before. Repayment thresholds and repayment percentages remain unchanged under existing regulations.
What May Change on Your Student Loan Account?
The main difference borrowers may notice is an adjustment to the overall balance shown on their online account or annual statement. This reflects corrected interest calculations rather than a change in repayment obligations.
Why Your Balance Can Change Without Your Monthly Payment Changing
Many graduates mistakenly assume that a higher balance automatically means larger monthly repayments. However, Plan 2 repayments depend entirely on income levels.
Student Loan Repayment Comparison:
| Factor | Before Correction | After Correction |
| Monthly repayment deduction | No change | No change |
| Repayment threshold | No change | No change |
| Payroll deductions | No change | No change |
| Outstanding balance | May change | Corrected |
| Interest calculations | Potentially incorrect | Corrected |
As a result, borrowers should focus primarily on the accuracy of their account balance rather than expecting changes to monthly deductions.
Could You Receive a Refund After the Plan 2 Balance Error?
Some borrowers may receive refunds if the error caused them to overpay their student loans. The SLC has confirmed that eligible refunds will be processed automatically.
However, borrowers who did not overpay will simply have their balances corrected, and those who have fully repaid their loans will not need to restart repayments.
“Refund eligibility depends on actual overpayments rather than balance adjustments alone. Borrowers should distinguish between corrected balances and refundable amounts.” — Student Finance Compliance Adviser
The distinction is important because some borrowers may see balance increases or decreases without qualifying for compensation or refunds.
How Can You Check If Your Student Loan Balance Has Been Corrected?
The Student Loans Company (SLC) will contact affected borrowers directly about any balance adjustments. However, you can review your account before receiving a notification.
Practical Checks to Review Your Account
While corrected balances are expected to appear in annual statements before the end of September, borrowers can review their records in advance to gain a clearer picture of their repayment history and current loan position.
Useful checks include:
- Reviewing your repayment history through your online SLC account.
- Comparing student loan deductions on payslips with HMRC records.
- Checking Self Assessment returns if you have multiple income sources.
- Monitoring emails and letters from the SLC regarding corrections.
Account Checks and Why They Matter:
| Check Type | Why It Matters |
| Online SLC Account | Shows your current balance and repayment history |
| Payslips | Confirms payroll deductions |
| HMRC Records | Verifies earnings used for calculations |
| Self Assessment Returns | Helps identify reporting issues |
| SLC Communications | Provides correction updates |
These checks can help confirm whether your repayments and earnings records match the information used to calculate your balance.
What If Your Balance Looks Incorrect?
If your balance appears inaccurate, contact the SLC for clarification. This is especially important if you have both PAYE and Self Assessment income. Having payslips, tax returns, and repayment records available can help resolve queries more quickly.
Regularly reviewing your student loan account can help you spot issues early and ensure your records remain accurate.
What Does This SLC Technical Issue Mean for Trust in the UK Student Finance System?
Although the Student Loans Company (SLC) technical issue affects only a small number of borrowers, it has raised concerns about transparency and accuracy within the UK student finance system.
For many graduates, student loans are a significant financial commitment, making accurate balances essential for budgeting and long-term financial planning.
The issue has also highlighted the complexity of Plan 2 loans, particularly income-based interest calculations. Recent measures, such as the 6% student loan interest rate cap for the 2026/27 academic year, reflect ongoing concerns about affordability.
Maintaining trust in the system depends on accurate data sharing, clear communication, and the prompt correction of any errors that arise.
Conclusion
The Student Loans Company technical issue has affected thousands of Plan 2 borrowers, but the good news is that the errors have been identified and corrected.
While some balances will increase or decrease as adjustments are applied, monthly repayment amounts will remain unchanged.
Borrowers who overpaid will receive refunds where applicable, and affected customers will be contacted directly by the SLC. Reviewing your account and annual statement can help ensure your student loan records are accurate and up to date.
Frequently Asked Questions
How Will I Be Contacted if I Am an Affected Plan 2 Borrower?
The Student Loans Company (SLC) has confirmed that affected borrowers will be contacted directly through official correspondence linked to their student loan account.
Do I Need to Contact SLC if I Think My Balance Is Incorrect?
Not necessarily. Affected borrowers are being contacted automatically, but you can contact SLC if you still have concerns after reviewing your updated account information.
Could an Incorrect Student Loan Balance Affect My Mortgage Application?
Student loan balances are generally less important than monthly repayment obligations when applying for a mortgage. However, keeping accurate financial records is always beneficial.
Why Does My Plan 2 Student Loan Interest Rate Depend on My Income?
Plan 2 loans use income-based interest rates, meaning borrowers with higher earnings may be charged higher interest rates within the permitted limits.
What Happens if I Have Both PAYE and Self Assessment Income?
Some borrowers with income from both sources were affected by HMRC reporting issues, which contributed to incorrect interest calculations on their accounts.
Will My Corrected Student Loan Balance Appear on Previous Statements?
Historical statements are usually not updated. However, corrected balances should appear on future annual statements and within your online student loan account.
Can I Request a Refund if I Have Overpaid My Student Loan?
If an overpayment has occurred, SLC will generally process any refund automatically. You can also contact SLC to discuss your specific account circumstances.