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Student loan overpayments

Are you due a refund?

Amy Roberts
Amy Roberts | Edited by Ben Slater
Updated 4 November 2024

Many have student loan repayments automatically deducted from their wages each month, and assume all is well. Yet 100,000s accidentally overpay their student loans each year, often without realising. Here's how to check if you're one of them and, if so, how you can reclaim £100s, or even £1,000s.

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In this guide

In the last tax year alone, over ONE MILLION university leavers overpaid their student loans, according to the latest figures released by the Student Loans Company (SLC). Yet reclaiming overpayments often only takes minutes – this guide shows you how.

This guide covers those who went to university in 1998 or later. Started before that? You don't have an income-contingent loan – see Student loan repayment for info on your loan.

Watch Martin's student loan reclaiming video briefing

It's a great overview of how this works, whether you can reclaim, and if you should. It's under 5 minutes long.

Martin Lewis's student loan reclaiming video briefing.
Embedded YouTube Video

You can turn on subtitles using the closed captions icon in the bottom right of the video. This video is from ITV's The Martin Lewis Money Show Live, first broadcast on 5 November 2024. 

Or do you prefer to just listen?

Hear Martin explain how you find out if you're owed £100s back from student loan overpayments

Listen to 'Are you one of four million graduates who can reclaim £100s in overpaid student loans?' It was recorded in July 2024, and you can listen at:

BBC Sounds | Apple Podcasts | Spotify

 

Some inspiration first: 'I reclaimed £555 in 15 minutes'

1916669300

Here's some inspiration from people who started paying their student loan back early and then successfully reclaimed.

While the amount you can get back is often in the £100s, it's sometimes possible to reclaim much more. As was the case with Fiona, who wrote to us in October 2023 to say:

"Thank you so much. I knew something wasn’t right when I lodged my tax returns and reading Martin’s article was the catalyst for a sustained attempt to work out what had happened. I received £3,773 back."

We also heard from Lyndsey, who told us:

Thanks to watching Martin Lewis's programme last night I contacted the SLC and have got a refund of £706 as I had started paying straightaway. Great just before Christmas.

And Melissa said:

Just wanted to say a massive thank you as I read your article on overpaying on student loan repayments and realised there was a chance I had overpaid. Turns out I had and I've since received a refund of £900! I've been doing house renovations this year so this money has been incredibly handy in going towards them.

Lisa added:

I spent 15 minutes on the phone and got £555 back for overpayments on my student loan. Most was because of my maternity leave. Thanks so much, couldn't have come at a better time.

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The most common reasons you may have overpaid

Over recent years, the Student Loans Company has introduced a number of initiatives to reduce overpayments and improve the repayment process for students. This includes introducing an online repayment service, issuing automatic refunds and actively contacting those who might have overpaid.

While these changes have helped to reduce the number of students making overpayments, more than a million former students still overpaid in the 2022/23 tax year – so it's well worth checking.

There are four main reasons you might have overpaid your student loan. Here we take you through them, one by one:

Reason 1. You repaid the loan in SOME MONTHS despite not earning enough in the FULL YEAR

You shouldn't start repaying your student loan until you earn above a specific annual threshold. However in practice, repayments will be taken from your payroll monthly.

This means that if your earnings vary throughout the year, one month you could earn over the threshold, despite the fact that your total annual income in the relevant tax year remains under the threshold. This is more likely to happen if:

  • You only work for part of the year.
  • You take on extra shifts in a specific month.
  • You move to a higher or lower paid role mid-year.
  • You earn a bonus which puts you over the threshold for that month only.
  • You go on maternity or paternity leave for part of the year.

The repayment thresholds vary depending on when you started your course, and where you lived before university – you repay 9% of what you earn above the threshold

It's worth noting that when it comes to location, what counts is where you lived before going to university. For example, if you lived in Lancaster but went to university in Edinburgh, you're 'from England' for the purposes of your loan.

The key check: 'did you repay some loan when your total annual earnings were under your plan's threshold?'...

Repayment thresholds by plan

Plan

Who's on that plan

(based on when you STARTED & where you live, not study)

 Repayment threshold
1 England: 1998-2011. Wales: 1998-2011. NI: 1998-today including postgrads £24,990/yr (£2,082/mth)
2 England: 2012-2022. Wales: 2012-today £27,295/yr (£2,274/mth)
3 England: Postgrads. Wales: Postgrads  £21,000/yr (£1,750/mth)
4 Scotland: 1998-today, incl postgrads £31,395/yr (£2,616/mth)
5 England: 2023 onwards (but won't be repaying yet) £25,000/yr from earliest April 2026

Figures for repayments each year are only until either you've cleared your balance, 30 years have passed, whichever is first (Plan 5 loans will clear after 40 years). 

When you make your repayments via PAYE, student loan contributions are taken when you're paid – whether this is weekly, monthly or otherwise. So you repay when your earnings go over the equivalent of the annual repayment threshold for your pay period, for example, if you're paid monthly, you'll pay back your loan every month your pay goes over the monthly equivalent of your repayment threshold.

However, if over the course of a tax year (which runs from 6 April to 5 April) your total income is less than the threshold, you can reclaim.

The latest figures from SLC shows that 1,064,211 repaid their loan in 2023/24, despite not meeting the minimum earnings threshold to do so. Previous data obtained by MSE under the Freedom of Information (FOI) Act showed the number was 833,213 in 2022/23 and 998,476 in 2021/22.

Reason 2. You're on the WRONG PAYMENT PLAN by default

If you're recorded as being on the wrong plan, you could be repaying too much. The latest figures from SLC Shows that 20,575 students were on the wrong repayment plan in 2023/24. Previous data obtained by MSE under the Freedom of Information (FOI) Act showed the number was 165,106 in 2022/23 and 168,761 in 2021/22.

If you've started university since 1998, you'll have a Plan 1, Plan 2 or Plan 4 loan, depending on when you studied and where you're from – and the type of loan you're on determines how much you must repay each year. There are a couple of different reasons why you could be on the wrong payment plan:
 

  • Your employer may have wrongly assumed you were on a Plan 1 loan. This may be because it made a mistake, or because it simply didn't know. Crucially, the Government's guidance for employers that pay staff via PAYE (pay as you earn) is that if they don't know what type of student loan you have, they should make Plan 1 deductions. This means that many will be on the plan that requires you to make higher repayments by default.

  • Making a mistake while filling in the student loan section of the HM Revenue & Customs (HMRC) starter checklist form. If you entered the wrong information here, your employer may have recorded you as being on the wrong plan.

Can I have been paying too little because I'm on the wrong plan?

While it's less common, this can work the other way round too. The SLC told us that in 2019/20 some 30,224 borrowers who had a Plan 1 loan were on a Plan 2 repayment plan. That means they had a higher repayment threshold than they were supposed to – and so will have underpaid their loan.

If you're in this situation and it later becomes clear to HMRC and the SLC that you're on the wrong plan, the good news is you won't have to make up any historic underpayments. However, you will have Plan 1 deductions taken in future. 

Reason 3. You've started repaying TOO EARLY 

If you started uni from 1998 onwards and were a full-time student, you shouldn't have started repaying your loan until the April after you finished your studies, regardless of how much you earned after leaving uni. In practice, this means if you graduated in 2023 (or left uni for any other reason that year) you shouldn't have started paying anything back until April 2024.

The latest figures from SLC Shows that 59,251 students had loan repayments taken before they were due to start repayments in 2023/24. Previous data obtained by MSE under the Freedom of Information (FOI) Act showed the number was 39,013 in 2022/23 and 28,721 in 2021/22.

Starting repayments on your student loan too soon isn't normally the fault of the Student Loans Company – usually it's down to an admin error on the part of the borrower or their employer, which can include:

  • Making a mistake while filling in the student loan section of the HM Revenue & Customs starter checklist form. For example, if you incorrectly provided information about when you finished your studies.
  • A mistake from your employer. Even if you're sure you've filled in the paperwork correctly, it could be that your employer mistakenly set you up to start repaying too early.

 Reason 4. You had money deducted AFTER the loan was FULLY REPAID.

The Student Loans Company (SLC) now receives weekly data from HM Revenue & Customs, with an update on how much you've paid towards your student loan.

However, graduates who have actually finished paying off their loans may still have money unnecessarily deducted from their pay packets because of the timing of PAYE.

To help avoid overpaying once you've paid off your loan, the SLC now lets you make your last two years of repayments via Direct Debit, but many who didn't sign up to make their payments this way still ended up overpaying.

The latest figures from SLC show that 37,722 students had deductions taken after the loan was fully paid in 2023/24. Previous data obtained by MSE under the Freedom of Information (FOI) Act showed the number was 57,136 in 2022/23 and 51,912 in 2021/22.

HMRC should pay you back this money automatically, but it takes time. If you need the money now, or think HMRC might have forgotten to refund you automatically, you can reclaim manually.

Should you claim the money back if you've overpaid?

 A quick analysis on this from Martin Lewis, MSE founder and chair...

Martin Lewis, MSE Founder.

Martin's analysis: 'Overpaid? Why it usually IS worth getting the cash back'

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. How this works depends on what plan you’re on.

Many are on Plan 2 loans (eg 2012 to 2022 uni starters from England), with its current 7.3% interest rate. So on the surface overpaying may look a good idea. However, the Govt's own stats show more than three-quarters of people won't clear these loans in full before they wipe after 30 years. If so, overpaying these smaller amounts won't usually actually reduce what you will pay in future, so you don't gain by overpaying (the very highest earners who will clear the loans in time will gain) – so you may as well get that money back. 

If you’re a graduate/university leaver on another plan (so not including current students), then you’re far more likely to repay the loan in full before it wipes. This is because either the repayment threshold is lower or the borrowing amount tends to be lower. 

That means there's less of a long-term gain for a typical student by taking back any overpayments. Though those in very low earning professions where that’s unlikely to change may well gain from taking back the overpayments. Even so, with these plans the current interest rate is 4.3%, so if you have other debts that are more costly it's worth taking the money back to clear those.

If you voluntarily repay you CAN'T later reclaim

This guide is all about helping people who've accidentally overpaid their student loan, because they've started repaying too early, overpaid in a year or have repaid after clearing their debt.

Yet it's also possible to voluntarily pay extra money towards your student loan, via a one-off or regular monthly payment.

If you choose to pay extra towards your student loan, SLC says you can't later claim this money back – so think very carefully about whether you want to repay more than the required minimum.

For more info, see voluntary student loan repayments.

How to reclaim if you've overpaid your student loan

If you've overpaid your student loan, how you get a refund will depend on what sort of overpayment it is. In all situations to get the money back it's important your contact information and bank details are up-to-date.

Reclaim 1. You repaid the loan in some MONTHS despite not earning enough in the tax YEAR – request your refund from SLC online

  • Tax years UP TO 2022/23. You can now request a refund online (rather than filling in a form). You'll need to sign in to your online repayment account and select ‘request a refund’. As part of this process, SLC will check for any refunds from previous tax years you might be eligible for.

    Once you've requested a refund through your online account, it'll be processed in 28 days and the money will get paid into your bank account – so make sure your details are correct.

    Although these 'below threshold' refunds could go as far back as the early 2000s, if you’ve fully repaid (or are close to full repayment), reclaiming means your loan account will be re-opened and the loan term will be extended – so it might not be worth it.
  • 2023/24 tax year. You’ll need to wait for SLC to get in touch before you can make a refund request for the most recent tax year – if it has, you can sign in to your online repayment account to request it. However, SLC is still waiting for HMRC to send earnings information for some people (this info's needed before they can work out any refund entitlement) – so some students might still have to wait.

Reclaim 2. You're on the wrong student loan payment plan by default – speak to your employer/call SLC

If you think you're on the wrong repayment plan, you can check what plan you're on in your online account and download an ‘active plan type letter’. This can be shared with your employer to make sure the plan types match. If you can't do this for whatever reason, see the quick question on how to check what plan you're on.

If you have overpaid because you're on the wrong repayment plan, you'll need to contact SLC to get your refund processed. You can call on 0300 100 0611 (for Wales it's 0300 100 0370 and +44 141 243 3660 from overseas). If you're reclaiming for the latest 2023/24 tax year, SLC will need to have received earnings info from HMRC first.

Reclaim 3. You started repaying your loan too early – you'll need to call SLC

If you have started repaying before you are due to (pre-statuary repayment due date), you need to contact SLC. You can call on 0300 100 0611 (for Wales it's 0300 100 0370 and +44 141 243 3660 from overseas) to get your refund processed. But bear in mind that phone lines can be busy, so be prepared to wait.

When you get through, explain your situation and ask to reclaim the money you're owed. To make the process smoother, before ringing see if you can dig out any old payslips, your payroll number, and/or your PAYE reference number. If you don't have these and think you may have overpaid, it's still worth giving it a go - though it may take longer.

In addition, there are no restrictions on how far back you can claim, so while many reclaiming will be recent graduates, there's nothing to stop you doing this even if you overpaid years ago.

Reclaim 4. You had money deducted after the loan was fully repaid – don't need to do anything

If you've paid over your loan balance and additional payments are taken, you're due a credit balance refund. You don't need to do anything for this, if SLC can verify your bank account is still active and used by you, a refund will automatically be paid into your account. Meaning it's important to keep your contact information, including bank details and email address up-to-date.

Alternatively they will contact you to tell you how to get a refund. If you’ve overpaid and have not heard from SLC you can ask them for a refund. 

Quick questions

  • I've nearly paid off my loan – how can I avoid overpaying?

    The SLC now allows those in the last two years of their loan repayments to repay via monthly Direct Debit, to avoid overpaying. Because you're paying directly to the SLC, you avoid the communication breakdown between it and the tax office.

    When you enter the last 12 months of your repayments, the SLC will write to you explaining you can set up a Direct Debit, if you haven't already done so. You can set it up through your online account, which is the easiest way.

    If you need any help, call SLC on 0300 100 0611 (for Wales it's 0300 100 0370 and +44 141 243 3660 from overseas).

  • What about part-time students?

    Since 2012, some part-time students have been able to get student loans.

    If you're a part-time student, the same thresholds apply as if you were a full-time student. But you're required to start repaying from the April four years after your course started, or the April after you leave your course, whichever comes earlier.

  • What if I studied another degree after my first degree?

    If you did a first degree and later went back to university to study for another qualification, you would still have been due to start repaying your loan from the April after you finished your FIRST course.

    If you studied an integrated master's degree (where the master's degree is part of the initial qualification), you would have been due to start repaying the April after you graduated or left the course, not the April after you finished the bachelor's element of the programme.

  • What if my employer can't tell me what plan I'm on?

    If your employer can't tell you which plan it has or had you recorded as being on, you'll need to check your payslips. 

    To do this, you'll need to look up what the repayment threshold was in the year that the payslip is from for the plan you should be on. Then take the period for which you were paid, and divide the annual threshold by how many pay periods you have in a year. For example, if you're paid monthly, divide the threshold by 12.

    Then, look at your monthly salary before tax was taken and deduct the monthly equivalent of the repayment threshold from this number. Nine per cent of the answer you get should be the same as the student loan deduction for that month – and if it's not, you may be on the wrong plan.

    The example below should help:

    If you earned a salary of £36,000/yr in the 2019/20 tax year, and were paid each month, you should have been paid £3,000/mth before tax, assuming no extra pre-tax deductions. If you should have been on a Plan 2 repayment plan, the repayment threshold would have been £25,725/yr, or £2,143.75/mth.

    So you should have paid 9% of the difference between £3,000 and £2,143.75, which is £856.25. Nine per cent of this figure is about £77. If you repaid far more than this in this example, you may be on the wrong plan    .

    Another option is to contact the SLC directly, but it can only tell you which payment plan you were on going back to March 2019, which is when it began sharing data digitally with HM Revenue & Customs (HMRC). Before this, the SLC says it won't know your loan plan as recorded by HMRC, although you can log in to your online account to view annual statements and payments before March 2019. 

    Alternatively, go straight to HMRC. It says it can guide you through the calculation using student loan deductions information held on its systems to identify what plan your employer was using. 

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