The error affected students with Advanced Learner Loans, which cover the costs of courses at colleges or training providers for those who want to go to university but do not have the right qualifications.
The Parliamentary and Health Service Ombudsman (PHSO) previously estimated that around 4,000 pupils had been impacted by the error up to October 2023.
The value of the loans that were not written off amounted to £18.9m, according to the figures, which were obtained through a freedom of information request to the Student Loans Company (SLC).
This led cash-strapped students to pay off loans with increasing interest rates that should have been cancelled, causing immense “stress and frustration“.
It vowed that steps have been taken to “ensure this issue cannot happen again”.
He added: “While the SLC has been responsive and tried to minimise these instances, there is evidently still some room for improvement.
‘It made me really anxious’
Jennie Bradbury, 38, from Stoke-on-Trent, received an Advanced Learner Loan worth £2,395 in July 2013.
The qualification allowed her to progress to a midwifery degree at Keele University.
square SAVING AND BANKING More than 100,000 graduates face student loans over £100,000 they may 'never repay'
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“It was really frustrating,” she said. “It made me really anxious as well because I was worried about the interest that was going onto my other loan and how it was going to affect it when I was paying it back.”
Unsatisfied with the handling of her case, she contacted the Independent Assessor for the Department for Education, which recommended the SLC increase this payment to £200.
PHSO chief executive Rebecca Hilsenrath KC said: “Thousands of students have been affected by this and have been paying off a loan which should have been written off.
“Following our investigations, thousands of people have had these loans written off. We welcome the steps which the Student Loans Company is taking to stop these system errors happening again.”
Just under £71m of the £92m requested has been withheld by the Student Loans Company (SLC) since 2019 after the loan applications were found to be fraudulent.
Many graduates are struggling with student debt, with The i Paper recently revealing that over 100,000 graduates currently owe more than £100,000 in student loans.
The Office for Students (OfS) prediected that more than four in 10 univerisities in England will be in financial deficit by this summer.
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square STUDENT LOANSOver £20m paid out on fraudulent student loan applications since 2019
Read MorePhilippa Pickford, the OfS’s director of regulation, said the crisis “is largely driven by a failure to recruit the anticipated levels of non-UK students”, adding that “recruitment levels for these students for 2024-25 are now projected to be about 21 per cent lower than projected last year”.
The cap on tuition fees for universities and colleges in England and Wales will increase by £285 to £9,535 from August 2025 to account for inflation.
A spokesperson for SLC said: “All eligible Advanced Learner Loans balances have been written off and no customer has been financially disadvantaged as a result of this issue.
“SLC has taken steps to ensure this issue cannot happen again.”
If you have been charged due to a student loan system error and would be happy to share your story, please email kyriakos.petrakos@theipaper.com
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