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How the Student Loans Company is Penalising post-2012 Applicants

The Student Loans Company is piling extra pressure onto graduates who took out a student loan since the switch to the “plan 2” system in 2012.

Increase in interest charged to graduates

This new more complex loan system has some scary hidden fees for those who haven’t yet declared their income to the company.

Whilst studying, the interest on a student loan in a “plan 2” scheme is calculated as inflation, measured by the RPI (retail prices index), plus 3 percent.

However, after graduating these rates can vary depending on things like income. Graduates earning under £21,000 are charged the RPI, which increases up to RPI + 3% when earning £41,000 and over.

But here’s the really sneaky part:

“If you haven’t yet responded to communications with the Student Loans Company (called non-compliance) then you are automatically given the highest rate of charge, which is approximately 6.1%”.

This charge is applied retrospectively 42 days later, and if you contact to complain you are only entitled to a refund for the month previous, leaving you with no options to claim for historical over charging.

This extra charge on some estimates increases the total paid by UK graduates in the range of an extra £75 million pounds a year. This could definitely negatively effect young people looking for credit, and make it tricky for people to find other loans, often resulting in them searching for short term options such as payday loans (click for more info).


Matt is a Mathematics graduate with an in-depth knowledge of finance and accounting. His hobbies include playing squash, tennis, and scrambling in the mountains.

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