Nine universities start legal action over student loan error row

Nine universities have begun legal action against the government in a row over students being asked to repay loans as soon as possible.

About 22,000 students in England are caught up in the dispute, after being sent letters saying they were given maintenance loans and childcare grants in error and must immediately pay the money back.

The students are all studying weekend courses, which have been suddenly classified as distance learning.

The universities in the legal case described the decision as "abrupt" while the National Union of Students urged the government to halt the "immediate clawback" of loans.

The government said students had been let down by "incompetence or abuse of the system".

The students affected received tuition fee and maintenance loans, and in some cases childcare grants, approved by the Student Loans Company.

Some students are just weeks from completing three-year degree courses and were shocked to receive letters from their universities in recent weeks informing them the Student Loans Company had decided their courses had never been eligible for funding.

While universities have reassured students that repayment plans will take into account their circumstances, it still means repaying on what some letters have described as an "accelerated" timeframe.

This is different from normal repayment, which for Plan 5 loans issued in England since 2023 is at a rate of 9% of graduate earnings over a threshold of £25,000 for up to 40 years.

Now nine of the more than 20 institutions involved have begun legal action against the government to challenge that decision.

In a statement they said the decision was taken with "minimal notice" and "has caused serious financial distress for affected students" with some considering leaving their courses.

Just three universities are putting their name publicly to the legal action - Bath Spa, Southampton Solent and London Metropolitan.

The vice-chancellor of Bath Spa University, Prof Georgina Andrews, said the universities had acted in "good faith" and the sudden decision "punished those who are the most vulnerable in our society who are trying to better their lives through education".

The universities said they "strongly reject" that in-person, timetabled weekend teaching is classified as "distance learning", arguing it "defies common sense".

Prof Julie Hall, the vice-chancellor of London Metropolitan University, added the decision "hits students from underrepresented and lower income backgrounds the hardest".

The National Union of Students vice president Alex Stanley said students' trust had been "broken" as a result of the mistakes made.

The NUS said "regardless of where the blame lies" it was within the power of the Education Secretary Bridget Phillipson to stop the "immediate clawback".