Student Loan refunds: are you owed money?
Did you know that over 100,000 graduates are owed money by the Student Loans Company for repaying their loans too early? And you could be one of them!
There's only one number that matters on your payslip, and that's the big juicy one at the bottom which tells you how much money you're getting paid... right? Well, there's actually another important number on there – one which could mean you're owed hundreds of pounds.
Since the revelation in 2017 that over 100,000 graduates could apply for Student Loan refunds after the Student Loans Company (SLC) started taking repayments early, we've been inundated with stories of successful claims.
The best part is, it’s a lot easier than you might expect. There are no lengthy forms to fill in and you could get hundreds of pounds back in just a few minutes. Here’s your step-by-step guide to how it’s done!
What's in this guide?
- When you start repaying your Student Loan
- Why have repayments been taken too early?
- How many people are owed a Student Loan refund?
- How much money you could be owed
- How to check if you're due a refund
- Is it worth getting a Student Loan refund?
- How to claim your Student Loan refund
- Other reasons you could be due a refund
When should you start repaying your Student Loan?
You shouldn't start paying back your Student Loan until the April after you graduate. So, if you graduated in July 2019, you would start paying off your loan in April 2020, giving you an eight-month break before payments are deducted from your salary.
This is the case for undergraduate and postgraduate students alike, although it's slightly different if you're a part-time student – you’ll either start repaying your loan from the April after you graduate or the April four years after your course starts, whichever comes first.
However, it’s also important to remember that even after you've become eligible to repay your loan, you still won't make until any repayments until you're earning above a threshold.
Exactly which annual earnings threshold applies to you depends on when you started uni, which level you studied at and where you lived when you started uni. Remember: it's the country that you ordinarily lived in at the time that gave you your Student Loan, not the country you studied in.
Student Loan repayment thresholds 2019/20
|Annual earnings (undergraduate)||Annual earnings (postgraduate)|
|England and Wales (pre-2012)*||£19,390||N/A|
|England and Wales (post-2012)*||£26,575||£21,000|
* Pre- and post-2012 refer to when you started university, not when you graduated.
For those who are self-employed, HMRC will work out how much you’re due to pay based on your tax return.
It's also worth bearing in mind that the repayment thresholds have changed down the years, so the above figures may not have applied during the time between you graduating and becoming eligible to repay your loan. Check out this page to see previous Student Loan repayment thresholds.
But whatever the threshold is, the bottom line is that nobody should be repaying their Student Loan before the April after their graduation.
Why have Student Loan repayments been taken early?
Once you're eligible to start paying, Student Loan repayments are automatically deducted from your salary.
While this makes life a lot easier and means you don't have to worry about actually making your repayments, it also means people tend not to notice when something goes wrong – namely, repaying your Student Loan too early.
There have been a number of reported reasons for people having made repayments too soon.
For example, when you start a new job, you’ll often have to fill in a form stating whether you’ll be making Student Loan repayments. If you or your employer makes an error filling this in, you could be incorrectly categorised as being eligible to make repayments even when you're not.
It’s also much more likely to happen if you start earning above the salary threshold before you're eligible to start making repayments (the April after you graduate).
Don't worry if it was your fault that you made early Student Loan repayments – even if you're the one who made the mistake, you’re still eligible for a refund, so don’t be afraid to ask.
Sometimes it can just be a random admin error. For Jo Westbury, it was a mix-up with graduation dates:
I called the Student Loan Company [...] they advised me that they had two graduation dates for me which is why I started paying back earlier!
I had to call my uni (who had no idea where they got the earlier graduation date from), who then had to get in touch with the Student Loans Company to confirm that I graduated in 2016 and not 2015.
The Student Loan Company have advised that, once they receive confirmation of my graduation date from the uni, they will refund my £820 within 30 days!
How many people are owed a Student Finance refund?
A huge number of graduates are entitled to a refund, so make sure to check to see if you’re one of them! In total, the numbers due a Student Loan refund add up to well over 100,000 and previous Freedom of Information (FOI) requests have revealed the eye-watering breakdown.
|Tax year||Number of grads owed a refund||Number of grads who claimed a refund|
This shows that, in just three years, over 100,000 of you were eligible for a refund but didn’t claim it (don't worry, there's no deadline for getting your money back) – so, if you haven’t already, hunt out those payslips and get checking.
Average Student Loan refund
We’re not talking about small sums here!
The average refund paid out to claimants who overpaid in the 2014/15 tax year was just over £395, while in 2015/16 it was £370 and in 2016/17 it was £266.
But these are just average figures. We've seen reports of graduates reclaiming over £1,000 in early repayments, while Sammy, a member of our Facebook deals group, said her refund was just £22.
In Sammy's case, she had spotted that she was making early repayments pretty much straight away, and that if she hadn't, she would have ended up being owed a lot more. Of course, this would have meant paying out a lot more in the first place – a good lesson in checking your payslip every month!
How to check if you repaid your Student Loan too early
To find out if you started making Student Loan repayments too early, simply get hold of a payslip from before the April after you graduated.
As you can in the image above, your payslip should have a section that says how much was deducted in the form of Student Loan repayments. If the payslip is from before the April after you graduated, the amount here should be £0 – anything else and you're owed a refund.
Don’t worry about totalling up exactly how much money has been taken too early – the SLC will do the hard work for you. As long as you have the confirmation from your payslip that at least some money was taken before the April after your graduation, you’re good to go.
Is it worth getting a Student Loan refund?
You may be thinking, "why bother getting a Student Loan refund if you're going to have to pay it back a later date?". In theory, that's a good point. In theory.
You have to remember that there’s a very high chance you’ll never pay off all of your student debt before it’s cancelled – in fact, the chances are you won't even get close. For all the many failings of the Student Finance system in this country, the repayment system is actually pretty generous.
We go into this in more detail in our guide to Student Loan repayments, but as you only ever repay 9% of your earnings over a threshold, your monthly contributions will always be very manageable.
And, as the total debt when you graduate is likely to be around £50,000 (and that's before you add the interest that accrues as a graduate), these small monthly repayments are rarely enough to clear the debt before it's wiped (around 30 years after you graduate – again, head to this guide for more info).
As such, the IFS (Institute for Fiscal Studies) estimates that 83% of students under the current system will fail to repay some or all of their loans before they're cancelled. Still think there's a chance you'll repay in time? Use our Student Loan repayment calculator to find out for yourself.
So, given that you're likely to leave £1,000s of your loan unrepaid, why not claim back the few hundred quid that they took from you early?
When students see how much debt they’re in after graduation, it can be easy to panic and try to pay it all off before it starts accruing more interest.
However, if you pay it back at the rate set by the Student Loans Company, there’s a high chance a big chunk of it will be written off after 30 years, saving yourself loads of money in the long run.
If you've been making repayments too early, I’d definitely recommend requesting a refund if you’re eligible, as you'll likely never have to pay it back.
Jake Butler, Save the Student's Student Finance Expert
How to claim a Student Loan refund
This is the bit which puts people off the most – the actual claiming of the refund. But believe us, it’s a lot more straightforward than you may be expecting.
It’s best to have a few bits of paperwork to hand to make the process as quick as possible, so try and have your payroll number, PAYE reference number and payslips at the ready.
But don't worry if you can’t track these down, as many graduates say they've been successful simply by ringing up and asking, even without the paperwork. We've only heard positive things about the SLC workers on the other end of the phone – lots of you have told us how friendly and helpful they were!
All you need to do is call the Student Loans Company on 0300 100 0611 (+44 141 243 3660 if you're calling from overseas), explain that you think some Student Loan repayments were taken from you too early and that you'd like to request a refund.
They’ll be able to access your account to see how much you’re owed and issue your refund in one fell swoop. One phone call and your Student Loan refund will be making its way towards your bank account.
It also doesn’t matter how long ago you graduated – it could have been two years ago or 10 years ago, all claims are still valid.
Student Loan overpayments and other reasons for refunds
Making early Student Loan repayments is just one of a few cases where you might be due a refund.
These are the other reasons you may be due a Student Loan refund:
Repaying when you earn less than the threshold
As we explained earlier, you shouldn't be making any Student Loan repayments if your salary is below the earnings threshold. Occasionally, for whatever reason, people earning less than the threshold still end up having repayments deducted from their payslip.
Use our complete guide to Student Loan repayments to work how much you should be earning before you start making repayments – we've even included weekly and monthly equivalents of the annual thresholds, just in case that's how your salary is calculated.
Your salary varies throughout the year
If you only worked for part of the year, earn a different amount each week or month, or simply moved to a lower-paid role, you may find that you made Student Loan repayments despite eventually earning less than the annual threshold.
While the all-important figure is your annual threshold, the SLC looks at your earnings each week/month and checks to see if you're over the weekly or monthly equivalent. If you're earning above it, you'll make a Student Loan repayment.
However, if by the end of the financial year (which runs April to April) your varying salary means that you've earned less than the annual threshold, you'll be entitled to a Student Loan refund.
You've overpaid your Student Loan
Due to some issues with how the Student Loans Company and HMRC (the taxman, to you and me) share data with each other, there have been a number of reported instances of graduates paying off their Student Loan in full but continuing to make repayments.
This issue only affects people who are close to repaying the balance in full and, in some cases, graduates have overpaid their Student Loans by as much as £10,000.
Again, if this has happened to you, you're entitled to a refund and you should call the SLC to sort it out.
The important thing is to stay savvy. In most cases, your Student Loan repayments will be taken from your salary automatically without you having to do any work – meaning mistakes often go unnoticed.
So, always take time to check your payslips and keep up to date with any changes to repayment eligibility so you’re only ever paying back what you’re supposed to.
Did you know that you could be eligible for a tax rebate too?