Incorrect student loan arrears balance - should I pay it?

Question

Background

I have a student loan (Plan 1) with the Student Loans Company in the UK. I've been living overseas for several years and making income contingent repayments, based on an annual income assessment.

Typically, each August they send me a form to complete and return along with evidence of my income. In September they write back, confirming whatever amount they've decided I owe each month based on my earnings. Sometimes they'll make an adjustment in March if changes to the UK RPI affect my interest rate, but other than that, there is usually no further correspondence until August the next year.

Situation

Last year they didn't send me an assessment form when they usually do (all of their outbound correspondence is logged on their website, I can see when they've written and download scanned copies of the letters when I'm logged into my account), the only mail I received from them in 2016 was confirmation of setting up automatic payments.

If they had sent me an assessment pack, the information I would have returned at the time would have indicated a modest increase in pay from the previous year (about 5%).

Despite the gap in communication, in March 2017 they wrote:

We previously told you that we would send you a new overseas schedule when we knew what your repayments would be for the full assessment period. We can now confirm this. Your monthly repayment will be: £XXX

The amount they "confirmed" was the same as what I'd been paying the previous year and covered the period October 2016 to September 2017. I figured the correct amount based on my slightly higher income should be slightly more, not worth contacting them about.

This year I got a new job with a hefty pay increase. They did send an income assessment form, and they've increased my monthly repayment amount commensurate with my new salary. The new monthly payment amount is fine, I was expecting it, but...

They've also added an arrears balance of £2000.

When I contacted them about this, they wrote back:

With your overseas assessment form arriving previously we have had to amend your back dated standard monthly repayment amount to the correct figure and this has caused an increase and an arrears balance to be paid based on your earnings provided.

Your last assessment ended on 30/09/2016 and we didn't receive a new one.

They're right that they didn't receive a new assessment pack, but despite this they "confirmed" a monthly payment amount for the whole 12 month period, and I paid all of those dues in full. And if they had received an assessment pack at the right time, they would have calculated dues based on a much smaller salary than my current one. They appear to be assuming that I've been making my current salary for much longer than I really have. This seems at best incompetent and at worse shady.

I could dip into savings to pay this, but I really don't think I owe them for this error. The interest on the loan is 1.25% at the moment, and I earn 1.20% interest in my savings account, so this isn't so much a question of what is the most cost effective solution, but rather what is the appropriate thing to do?

Should I...

1. Stand my ground and refuse to pay any of it?
2. Go find my old paystubs and get them to recalculate the correct arrears amount? (ugh)
3. Just pay the whole thing?
4. Something else?

Answer 1

And the answer is... Number 2!

^{And number 2 again. And again... And again... ad infinitum (well almost).}

So it's been over a year. But this issue is finally resolved (I think). I wanted to provide an update in case anyone else finds themselves in a similar situation, if for no other reason than to provide a glimpse of light at the end of the tunnel.

I decided to email SLC, stating what appeared obvious - they had assumed I'd been making my current salary during the entire period for which they had not previously made an assessment. Their response was predictable - please send proof of the correct income amount for the period/assessment disputed and we will recalculate. Great, should be resolved in no time, right?

I emailed them back with scanned copies of my W-2 (equivalent to a P60 in the UK), detailing my income for the entire calendar year, hoping that would be sufficient as there really isn't any other document that summarizes income quite so efficiently as this one, at least if your income is all from basic wages (which mine is). I waited the requisite 21 days for a response. Yes you read that right - every time you email SLC, even if you are providing information that they have requested, they want three weeks to get back to you. After four weeks without a response I emailed them again, asking for an update, and three weeks after that email they finally replied that they hadn't been able to read my previous email because of the attachments. Those attachments were pretty plain vanilla PDFs by the way. No encryption or password protection, under 20KB... I have no idea why they couldn't open it but I was pretty fed up by this point and figured the best solution would be...

Write to them the old fashioned way! I included copies of my email correspondence, the attachments that they'd been unable to open for whatever reason, printouts from the wayback machine showing their published exchange rates and income thresholds from 2 years ago, and a grumpy letter about their email response timeframe and inability to open a file format that has been around since the early 90's.

After waiting several weeks, they wrote back a very short reply explaining that I had an arrears balance because of a previously unassessed period of income that they assessed the following year and determined I owed additional repayments for. So basically the same response they gave in their first email, with no reference to or even acknowledgement of the additional materials I had provided for them to reassess.

This was pretty maddening, so my next correspondence included copies of everything sent previously, and a terse cover letter stating that I already understand why they had assessed an arrears balance, but that I would like them to actually look at the enclosed materials and reassess that period based on the information provided.

Several weeks later the response comes and they advise they have read the materials I provided this time, but came to the same conclusion and wouldn't change the arrears amount. At this point I tried to escalate things by asking for an "Independent Review" of my case (again, by snail mail), and waited, and waited, and waited.

Eventually I received two letters stating that they were considering sending the balance to a collections agency. No mention of my request for independent review. So I decided to go back to square one and phone them again. Are you tired yet? I was.

Fortunately, the person I spoke to on the phone this time around seems to understand everything perfectly, took the time to parse all of the previous correspondence and figure out where things had gone wrong, and then suggested emailing in paystubs. And not just one or two, but every paystub I had for the whole period up until my salary changed. This meant having to contact my previous employer, and them having to jump through some hoops for me since they had changed which company they used for payroll since I'd left, of course. Anyway, finally with a virtual pile of PDFs (you can imagine my trepidation, attaching PDFs to an email destined for SLC's inbox again) I sent them all off and waited (3 weeks of course).

I could hardly believe my eyes when I logged in and saw that my balance had actually been reduced by about half. I called them right away and scheduled a payment to clear the balance in full, which they gladly set up.

Today I logged in again to see a different, completely bizarre amount showing in arrears, but was advised when calling again that this was just some system thing and that everything I have owed to date has been received, it will drop to zero in a few days. Umm, ok...? Well whatever, phew.

TL;DR

Send paystubs for the entire period in question. No summaries, tax return pages or W-2s. Send all the individual stubs for every single payment during whichever period they assessed incorrectly. And hope you get a competent individual at the other end.

SLC Customer Service

I will say that the level of service received by phone has drastically improved in the last 15 months since I originally called SLC about this issue. I don't know if they replaced staff, retrained or what, but it seems like phone is a reasonable way of getting your issues with them resolved now. I would not have made that recommendation a year ago - having a paper trail to fall back on as the mistakes just piled up was invaluable in the end. But I've spoken to them 3 times in the last month, got a different agent each time, and they've got their ducks in a row at last.

Answer 2

I'm in exactly the same situation, although my amount in arrears is only £1000. I called up their help desk on the number quoted in the letter and they asked me to send additional pay stubs for them to recalculate the amount in arrears. I've emailed those to them, and am now waiting for a reply. This should reduce the amount in arrears to about £500. You might consider doing the same, if your pay rise came just before the latest assessment.

You can calculate the amount you are in arrears relatively easily. All you need is the exchange rate and allowance that SLC use (I used http://archive.org/web/ to find values for previous years) and your salary each month, then net that amount against what you paid.

I'm a bit miffed about paying it, but I would have paid it if I was earning the same money in the UK, so I can't complain too much.