Student Loans Company (SLC)

3. Mr E says the SLC incorrectly calculated his monthly student loan repayments. He works overseas and participates in a salary sacrifice scheme, which reduces his taxable income. He does not believe the SLC properly took this into account.

4. Mr E says this situation has had a significant impact on him. He describes feeling mentally exhausted, experiencing prolonged stress, and facing financial pressure due to the level of repayments requested.

5. Mr E would like the SLC to be held accountable for the information it provided and seeks compensation in line with Level 4/5 of our Severity of Injustice Scale.

6. Mr E currently resides in Australia, and he complained to the SLC on 4 October 2024. In his initial complaint to the SLC he said he submitted three payslips on 28 June but recognised these were incorrect so promptly resubmitted the correct ones.

7. Mr E said the SLC sent him a repayment confirmation letter on 11 July, and an overseas repayment schedule on 17 July. However, Mr E says both documents contained incorrect monthly repayment amounts as the SLC had not considered his salary sacrifice payments. Mr E felt that these payments should be deducted before any taxable income.

8. Mr E explains that the SLC would review the amount he should pay and that it was putting any payments on hold for the time being. Mr E also complained about the service he received from the SLC, stating that certain call handlers were aggressive and the situation had taken months to resolve and he had been given conflicting advice about making payments.

9. The SLC wrote back to Mr E on 28 October. It said that it was sorry about his situation regarding arrears and that the customer service he received had not been great. At this point the SLC identified Mr E had arrears of £644, due to missed repayments but it did not expect him to pay back in full if it was not affordable. The SLC also said it could not pause arrears unless Mr E had a change in employment circumstances.

10. The SLC also reviewed two phone calls it made to Mr E on the 17 July and 23 August. It said that in the phone call of 17 July it asked Mr E to call back in five days to see if it made any errors. According to the SLC, Mr E did not call back within this time. As such, the SLC wrote to Mr E on 8 August asking him to get in touch.

11. The SLC said that Mr E called on 23 August and again requested that his employment details be reviewed as he believed it had made a mistake. The SLC said Mr E’s repayments were based on gross income and not net. The SLC said it could not comment on information on HMRC’s website and that the terms and conditions did not apply to him whilst he worked outside the UK. The SLC also referred Mr E to the following guidance, Terms and conditions of student loans - GOV.UK.

12. The SLC further explained that if Mr E could not afford to pay arrears it could lower monthly repayments, but it first needed him to complete an income and expenditure form. The SLC said that although a reduced repayment could be accepted, Mr E’s account would still accrue monthly arrears. This was due to monthly repayments of £161.00 which the SLC were unable to alter or stop because it is income based.

13. The SLC said that it had calculated Mr E’s student loan repayments as follows:

• the current repayment threshold for Plan 2 customers working in Australia was £32,755.0 • the exchange rate the SLC used was 0.536251 • documents Mr E provided showed his gross salary as $101,343.00 AUD.

14. The SLC used this information to generate the below calculation:

• Mr E’s gross annual income of $101,343.00 AUD converted into pounds = £54,345.29.

• Minus the threshold for his country of residence £32,755.00 = £21,590.29.

• Divided by 12 months = £1799.19.

• Monthly repayment at 9% = £161.92. Monthly Repayment Schedule when rounded down = £161.00.

15. Mr E disputed this response and said that the SLC should consider salary sacrifices before deducting tax. Mr E sent further correspondence to the SLC between 7 and 21 November and let the SLC know this issue was affecting his mental and physical health. The SLC addressed points related to Mr E not accepting the calculations and he requested specific signed contracts. The SLC also signposted Mr E to its website for policy documents relevant to his complaint.

16. The SLC sent a further complaint response on 27 November and explained in the UK there is a monthly and weekly threshold, which is why UK customers can request a refund if they have made repayments throughout the year but not earned the annual threshold. The SLC said HMRC did not operate overseas, so this meant the same tax rules did not apply in Australia.

17. On 19 December, the SLC sent a further complaint response to Mr E and said it noted it had made an error in its review of Mr E’s salary. The SLC explained that it accepted Mr E’s gross income as $95,062.78 AUD and using the same formula as above said his monthly repayments would be £136.

18. Additionally, the SLC said the arrears of £805 would be removed from the first repayment due on 20 December. It also clarified that in the UK, student loan repayments were made through PAYE, which were calculated and deducted by the employer. The SLC said that as per The Education (Student Loans) (Repayment) Regulations 2009 (“the Repayment Regulations”), when repayments were sent from overseas they use gross pay. It also acknowledged it had not explained the Regulations and Terms and Conditions of the repayment process as well as it could have. The SLC apologised for this and offered an ex-gratia payment of £100.

19. On 20 December, the SLC said it would schedule repayments from December until March 2025. Mr E wrote back in the same day saying he would not be able to make the payments and the differences in calculations arose in Section 42 of The Education (Student Loans) (Repayment) Regulations 2009. Mr E believed that the SLC could not take a percentage of his salary sacrifice and his gross salary should be $89,659.70 AUD and monthly repayments should be £114.

20. The SLC advised Mr E that it would escalate his complaint to the Independent Assessor. On the 13 June the Independent Assessor carried out its investigation of Mr E’s complaint. It found that the SLC had not made any errors when it calculated the monthly repayments for his student loan.

Mr E says the SLC incorrectly calculated his monthly student loan repayments. He works overseas and participates in a salary sacrifice scheme, which reduces his taxable income. He does not believe the SLC properly took this into account.

23. Before we decide if we should conduct a detailed investigation of a complaint, we look at whether there are signs the organisation has got something wrong. We do this by comparing what should have happened with what did happen. Having done so, we have not found evidence of a failure that has not already been addressed.

24. We understand Mr E’s concern that his salary sacrifice arrangements were not taken into account. He told the SLC that, based on his reading of the Repayment Regulations, his repayments should be calculated using a reduced figure that reflects these deductions.

25. We have carefully considered this point. The provisions Mr E refers to relate to repayment arrangements within the UK tax system, where repayments are typically collected through PAYE. However, Mr E is an overseas borrower, and different provisions apply.

26. Under Part 5 of the Repayment Regulations, borrowers living overseas are required to provide evidence of their income. The SLC then uses this information to calculate repayments. In this context, “gross income” is defined as income before deductions, including tax or other charges.

27. This means that, for overseas borrowers, the SLC is required to base its calculations on gross income before deductions such as salary sacrifice. We have therefore not seen evidence that the SLC applied the wrong approach here.

28. We note that the SLC did revise its calculation after identifying an error in the income figure it had initially used. It corrected this, reduced Mr E’s monthly repayment, removed arrears, and offered an apology and a £100 payment. We consider these actions were appropriate steps to put right the earlier inaccuracy and the impact it caused.

29. We also recognise that Mr E experienced poor service, including unclear communication and delays in resolving the issue. The SLC acknowledged this and apologised. While we understand how frustrating this would have been, we consider the steps taken were proportionate in the circumstances. Overall, we consider the SLC acted in line with the PHSO Principles, in particular being open and accountable and putting things right.

30. We recognise the impact this situation has had on Mr E, particularly given the stress and uncertainty he has described. We appreciate this will not be the outcome he was hoping for, but we hope this explanation clarifies how we have reached our decision.

1. We have carefully considered Mr E’s complaint about the Student Loans Company (SLC). We have not seen evidence of a significant failure in how the SLC applied the relevant rules to calculate his repayments.

2. We have seen that the SLC ultimately calculated Mr E’s repayments in line with the applicable regulations and explained how it reached this figure. We recognise, however, that the experience of reaching this position caused Mr E considerable frustration and distress.