For most unsuspecting graduates who are paying back their student loans, the inland revenue takes payments directly from your employer in the same way as they take tax. i.e. the more you earn the more you pay, this includes bonuses etc.

However after taking monthly amounts the inland revenue does not pay this directly to the student loan company, instead they wait until the end of the financial year in April and then pay the entire year off to student loans.

The effect of this is that the inland revenue hold on to your monthly payments for up to a year earning themselves interest, during the same period because student loans have not received these funds they in turn charge the graduate interest on theoutstanding amount even though it has been paid to the inland
revenue.

Bottom line is that for those in this position we pay interest to student loans on money which has been taken from our accounts which the inland revenue keeps and earns interest on.

Student loans petition