close
close

Apre-salomemanzo

Breaking: Beyond Headlines!

    • Student loan overpayments approach £80m – should you get a refund?
    aecifo

    Student loan overpayments approach £80m – should you get a refund?

    Umito Posted on

    Thousands of graduates could be asked for a refund on their student loan payments, with millions already returned to those who overpaid.

    Since the start of this financial year, the Student Loans Company (SLC) has repaid more than 310,000 customers a combined total of almost £80 million, with each repayment averaging £250.

    We’ve outlined four key scenarios that could make you eligible and how to apply.

    This newsletter offers free money-related content and other information about Which? Band products and services. Unsubscribe whenever you want. Your data will be processed in accordance with our Privacy Policy

    How Student Loan Payments Work

    The Student Loans Company is a government organization which administers loans and bursaries to students at universities and colleges in the United Kingdom.

    You may be able to borrow from the SLC to cover tuition fees, which will rise in England from £9,250 to £9,535 in September 2025, as well as living costs.

    Currently, maximum tuition fees vary by region. They cost up to £9,250 in Wales, up to £4,750 for Northern Irish students who live locally (up to £9,250 for others) and are free for most Scottish students studying in Scotland (up to £9,250 for students from the rest of the UK).

    You only start repaying your student loan once you leave school and your salary exceeds a certain salary threshold, which depends on the plan you subscribe to.

    Refunds are collected through the PAYE tax system, meaning they are automatically deducted from your salary and sent to HMRC before you receive your paycheck.

    How many refunds have been made?

    In some cases, glitches in the system mean graduates can overpay what they owe and end up being asked for a refund. New data from SLC shows almost £80 million has been refunded to 310,800 customers so far this financial year.

    This amount has already exceeded the total amount refunded in the 2023-24 fiscal year.

    Note: Refunds made in the above tax years could be related to an excess refund made in a previous tax year.

    Four reasons why you might be entitled to a refund

    There are four scenarios in which you may be entitled to a refund. Here we explain what this is and how many SLC customers could be asked for a refund.

    1 You have not reached the income threshold to repay

    Student loan payments are triggered once your income exceeds a set threshold for each weekly or monthly pay period. For Plan 2 graduates, for example, the 2023-24 weekly threshold was £524. Beneficiaries of this package will have been charged 9% on anything above this threshold.

    However, there is also an annual threshold (£27,295 in 2023-24 for Plan 2 graduates). Even though payments may be made correctly during each weekly or monthly pay period, your annual income may still fall below the annual threshold. For example, you may have received a one-month bonus that pushed you over the monthly threshold. Or maybe you received a pay raise mid-tax year that triggered refunds, but your annual income was still below the threshold.

    Regardless of the monthly salary thresholds, if your total annual income is below the annual threshold, you can claim a refund from the SLC based on HMRC’s end-of-year earnings data.

    In the 2023-24 tax year, the SLC refunded £26.5 million to 102,200 customers eligible for a sub-threshold refund.

    Our table presents the other 2023-24 thresholds to know if you have taken out a loan on another plan. You can find out the 2024-2025 repayment thresholds on the government website.

    If a client repays a Plan 1, Plan 2 and Plan 4 loan, they can only obtain a refund if their income was below the Plan 1 repayment threshold. If a client repays a Plan 1 and/or Plan 2 loan and a Plan 3 loan, he may be entitled to a repayment below the threshold for one but not for the other, depending on his income.

    2 You were put on the wrong repayment plan

    You can get a refund if your employer places you on the wrong plan – for example, if you started university from the 2012-2013 academic year and should be on Plan 2, but your employer marked you as Plan 1.

    You can check which plan you need to purchase by logging into your online account with the SLC and uploading your ‘Active Plan Type Letter’.

    Then ask your employer what plan they offer you. If it is different from your SLC account, ask your employer to correct this to ensure the correct deductions are made in the future.

    The latest figures from SLC show that around 20,500* customers were on the wrong repayment plan in 2023-2024.

    3 You started paying it off too soon

    Provided you meet the income thresholds, you will generally start repaying your student loan in April after your courses have finished. If you are studying part-time or following a long postgraduate doctoral course, you will be required to start repaying four years after starting the course. This is called your Statutory Payment Due Date (SRDD).

    If refunds are made before your SRDD, you will be eligible for a refund.

    The latest figures from the SLC show that around 37,700* customers have had their loan repayments made before repayments start in 2023-24.

    4 You have repaid your loan in full

    HMRC will ask your employer to stop paying your wages when you have repaid your loan in full, but it can take around four weeks for wage deductions to stop. This delay may result in overpayments.

    You can avoid paying more than you owe by changing your payments to direct debit in the last year of your repayments. Provided that you keep your contact details up to date in your online account, the SLC will contact you to advise you of the arrangements. If you haven’t received one about a year before your repayments are due, contact them to ask.

    The latest figures from the SLC show that 59,251 customers benefited from deductions after their loans were repaid in full in 2023-24.

    How to request a refund

    The method for requesting a refund depends on the reason for your overpayment. When refunds are due, they are paid directly into your bank account.

    • Refunds for payments below the threshold

    If you think you are owed a refund for repayments below the threshold, you can now request one directly through your SLC online account. Since launching this service in May this year, the SLC has contacted 653,000 eligible customers, of whom 213,000 have requested a refund online. By the end of September, it had refunded £61.6 million to 248,600 customers, with the average value of refunds being £250.

    The SLC plans to inform eligible customers each year whether they are due for a refund for the previous tax year. Recovery of overpayments below the threshold is optional; If you want, you can leave the overpayment in place to reduce your loan balance.

    • Refunds of payments made after loan repayment

    For those who have fully repaid their loan but still have deductions from their pay slip, the SLC will reimburse you automatically.

    • Refunds for other types of overpayments

    If you need to get a refund because you were placed on the wrong repayment plan or payments were made too early, you will need to contact the SLC directly.

    To have your refund processed, call the SLC on 0300 100 0611 (for Wales, 0300 100 0370; from abroad, +44 141 243 3660).

    *As customers may qualify for multiple loans in multiple package types, the number of overpaid customers may include some duplicate customers.

    Umito
    View all posts

    You Might Also Like