Some graduates say it is difficult to keep track of repayments

Former students claim they have overpaid loan repayments due to the pay-as-you-earn system in place to collect the debt.

They also say they have started paying back their loans before they earn enough.

The National Union of Students says the repayment system is not fit for purpose but HM Revenue and Customs says it is up to graduates to monitor payments.

Thousands of students every year take out the loans to help them pay university fees and living expenses while they are studying.

Many of them pay back their loans through the pay-as-you-earn system after they graduate.

When they begin to earn more than �15,000 per year, a percentage is taken from their wages according to how much they earn.

What we are seeing is a catalogue of bad administration Ben Gray, president of the National Union of Students in Wales

At the end of each tax year employers send the money collected onto HM Revenue and Custom (HMRC) which collects student payments on behalf of the Student Loans Company.

Up to eight months afterwards an annual statement is sent out to borrowers detailing how much money has been received.

But because HMRC is not told how much the total loan was to start with, it keeps taking money until instructed by the Students Loans Company or borrower to stop.

The graduates claim it can be difficult to keep track of how much they have paid, especially if they do not keep their payslips or change their job.

Ben Gray, president of the National Union of Students in Wales, said the student loans repayment system should be as transparent, flawless and flexible as possible.

"Instead what we are seeing is a catalogue of bad administration," he said.

Teacher Rhian Morgan from Swansea had been paying back her �16,000 debt despite only working in a part time job.

But in her statement from the Student Loans Company at the end of the tax year in 2003, it said that no payments had been made.

Delays

The Student Loans Company said Ms Morgan's was a highly unusual case and they would investigate it further.

Another graduate found that money was still being deducted from her monthly wage for seven months after her loan had been paid off.

The Student Loans Company and HMRC said it recognised there could be delays in getting accurate information out to borrowers because of the way the tax system works.

Derek Ross, deputy chief executive of the Student Loans Company said changes were being made to the repayment system to make it easier for borrowers.

This includes an online repayment site which would allow borrowers to view their current statement and calculate an up-to-date balance.

The Student Loans Company is also investigating whether graduates who are entering the final years of repayment could opt-out of the tax system and pay them directly to avoid unnecessary overpayments.