How to Get a Student Loan Refund

Each month, many have their student loan repayments automatically deducted from their wages and assume all is well.

But 100,000s accidentally overpay each year, often without realising.

In the last tax year, over one million university leavers overpaid their student loans.

Yet reclaiming overpayments often only takes minutes.

Money Saving Expert founder Martin Lewis says it is worth getting the cash back.

He explains: “Overpaying on normal loans is a good thing, it means you owe less and clear the debt quicker and repay less interest.

“Yet student loans don’t work like normal loans. It’s complex…

“If you claim the money back that you’ve wrongly overpaid, your outstanding loan balance will increase by that amount, and you will ‘owe’ more.

“The real question, though, is whether owing more means you will repay more.

Here is a guide on if you are eligible for a student loan refund and how to get one.

Why you might have overpaid

There are a few reasons why you might have paid more student loan than you were supposed to.

You earned less than the repayment threshold

To repay your student loan, your income needs to be over the threshold for the full tax year, from April 6 one year to April 5 the following year.

If you had a Plan 2 loan and an annual salary of £30,000, student loan payments come out of your monthly wage because it’s assumed that you’ll work the full tax year and earn over the threshold.

But if, for example, you lost your job in February and did not work until after April 5, the income would be under the threshold and you would be owed a refund for the total amount of student loan you paid in that tax year.

This could also be the case if your income decreased because you were on parental or sick leave.

You can see the repayment thresholds on GOV.UK or MyGov.Scot.

You continued paying after your loan was fully repaid

The Student Loan Company (SLC) recommends that you pay by Direct Debit instead of through your payslips when you’re in the final year of paying off your student loan.

They should send you a letter requesting this.

If you haven’t updated your details, you might miss the message.

It is common for your employer to keep sending your loan payments, even after you’ve paid it all off.

You can check your student loan balance and update your contact information on GOV.UK.

The wrong student loan ‘plan’

When you start a job, your employer needs to know when you started university to calculate how much they should send to the SLC.

If they have the wrong year written down, you might be paying back a Plan 1 loan, when you are actually on Plan 2.

There can be a big difference between what you paid and what you should have paid. You could also have paid too little.

It is recommended to compare what comes off your payslip with the percentage you should be paying.

You can find details of the thresholds and the amount you should be repaying on GOV.UK.

Paying student loan too early

You should only start paying off your student loan the April after you finish university.

If you get a job straight away and earn over the threshold, your employer might have started taking payments too early.

If you have overpaid because you earned less than the repayment threshold, you can claim via a form on GOV.UK.

People who believe they have overpaid their student loan for any other reason should call SLC.

It is a short process and they will usually be able to tell you on the phone whether you are owed a refund.

England, Northern Ireland or Scotland
Telephone: 0300 100 0611
Telephone: +44 (0) 141 243 3660 (outside the UK)
Monday to Friday: 8 am to 6 pm

Wales
Telephone: 0300 100 0370
Monday to Friday: 8 am to 6 pm (not open on bank holidays)