Post graduate loan refund

An employee ticked that they had a postgraduate loan to be repaid from their salary. This was correctly processed based on this information, however after two payments and after March payroll had been processed we received a notification that she was a non borrower, the payment should be stopped and a refund made. As we had processed our final FPS and were moving into the current tax year, we advised that we could not make the refund through payroll and to contact the student loan company. The individual has contacted them and they are advising that since she did not actually have a post graduate loan, they did not have funds there to refund. They have completed a form which apparently they send to HMRC but if they haven't received the payments what is the process for her to receive a refund

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