Student Loan Repayment Woes For UK Graduates

With over 13,000 pounds of debt waiting for them after graduation, UK graduates and young professionals have a serious financial obligation to fulfill in the first few years of their career. The average entry level salary for UK graduates is around 14,000 pounds, which means that individual professionals will struggle right out of university with living expenses on top of their debt. It is tough enough for students to pay off these debts when the process is running smoothly and they know exactly how much they owe. However, the recent news that the Student Loan Company and HM Revenue and Customs (HMRC) has been failing in their stewardship over student loan programs means that tens of thousands of graduates will need to become amateur accountants in order to retrieve money owed to them.

In the last few weeks, the Student Loans Company, the major provider of student loans in the United Kingdom, admitted that 21,000 UK graduates continued repayment deductions out of their annual salary despite having paid off the entirety of their loans. In addition to this, HMRC will issue nearly 2.5 million statements which are incorrect to past university graduates. The problem for university graduates is that the system requires several steps from monthly deductions to proper accounting. Professionals have a small percentage of their wages deducted by their employer to cover their university loans. At the end of the year, the employer sends these funds to HMRC which then reports repayment to the Student Loan Company.

Student Loan Company has responded to pressure by graduate groups and Parliament alike by saying that HMRC is responsible for reporting accurate numbers to them on a timely basis to create an accurate report. However, Student Loan Company will issue nearly 25,000 statements to graduates stating that they did not repay even one pound of their loan during the 2004-2005 business year. For these students, the task of demonstrating their financial responsibility is heavy.

Students need to resubmit checks and statements demonstrating that they made payments on a timely basis, which are sent to the HMRC and Student Loan Company. However, pending confirmation of that information from the HMRC, students are still considered to be delinquent in the eyes of Student Loan Company. Professionals can seek some solace in the outrage of all parties in Parliament, which is vowing action to streamline the process. Until then, graduates throughout the United Kingdom need to be aware monthly about their repayments and keep an accurate record where HMRC has not.