Student loan overpayments

Are you due a refund?

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.

In the last tax year alone, over ONE MILLION university leavers overpaid their student loans, according to our Freedom of Information (FOI) request. 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 11 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 December 2023. 

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

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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:

1. You've made repayments despite not earning enough 

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 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.
  • 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:

  • Started uni between 2012 and 2022 and from England, or from 2012 onwards and from Wales? You're on 'Plan 2', the repayment threshold for which has been frozen at £27,295/year (see here for what it was in previous tax years). What counts is how often you're paid, so you repay when your earnings go over the weekly or monthly equivalent of this threshold.

  • Started uni 1998 to 2011 (or since and from Northern Ireland)? You're on 'Plan 1' and the current threshold is £22,015/year, though it's risen each year since 2012 (see what it was in previous tax years). Again, how often you were paid is crucial, so you'd have made repayments when your earnings went over the weekly or monthly equivalent of the threshold.

  • Started uni since 1998 and from Scotland? You have a 'Plan 4' loan and the current repayment threshold is £27,660. As with Plan 1, the threshold has risen each year since 2012 (see what it was in previous tax years), and again, what counts is how often you were paid.

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.

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.

Data obtained by MSE under the Freedom of Information (FOI) Act from the Student Loans Company (SLC) shows that in the 2021/22 financial year, 998,476 students in 2021/22 and 833,213 in 2022/23, repaid their loan, despite not meeting the minimum earnings threshold to do so.

2. You're on the wrong repayment plan

If you're recorded as being on the wrong plan, you could be repaying too much. The FOI data shows 168,761 students were on the wrong repayment plan in the 2021/22 financial year and 165,106 were in 2022/23.

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. 

3. You've repaid but still had money deducted

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.

Our data request shows that in the 2021/22 financial year 51,912 students had deductions taken after the loan was fully paid, this went up slightly to 57,136 for the 2022/23 financial year. 

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.

4. You've started repaying your loan 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 graduate in 2023 you shouldn't pay anything back until April 2024.

The data shows that in the 2021/22 financial year 28,721 students had loan repayments taken before they were due to start repayments, while in the 2022/23 tax year, 39,013 students were affected. 

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.

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 7.6% 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 6.25%, 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, the 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 believe you've overpaid, first check if you're due a refund by logging into your online account.

If you are due money back, the Student Loans Company (SLC) says the quickest way to get a below threshold refund is to fill out its new online refund request form.

You'll need to give your customer reference number, national insurance number and date of birth, and say which tax year you're claiming for. Email completed forms to below_threshold_refunds@slc.co.uk.

For all other refunds 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 are currently extremely busy, so be prepared to wait.

When you get through, explain your situation and ask to reclaim the money you're owed. If you're reclaiming because you think you earned under the threshold in a tax year, you'll need to wait until that tax year is finished.

Before ringing, to make the process smoother 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, if you're reclaiming because you think you're on the wrong repayment plan, you should have checked what plan you're on with your employer or ex-employer first, and double-check this doesn't correspond with the plan you should be on (if your employer won't help, see the quick questions below).

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.

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 taxman.

    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 up the direct debit 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).

  • The Student Loans Company (SLC) says I've overpaid – what should I do?

    If you do get a letter telling you you've overpaid, you'll just need to call on 0300 100 0611 (for Wales it's 0300 100 0370 and +44 141 243 3660 from overseas) to arrange your reclaim.

    Use these same contact methods if you think you've overpaid but haven't been written to and don't want to wait. You'll likely need your payslips or P60s from the past two years.

  • 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.

  • My employer won't tell me which plan it has me as being on – what should I do?

    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
    .

  • I think my old employer had me recorded as being on the wrong plan – how do I check?

    The first thing to do is to contact your old employer to see if it can tell you the plan it recorded you as being on. You can then dig out old payslips or old P60s to check for student loan deductions and have a go at doing the maths yourself as detailed above to check if it matches up.

    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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