Student Loan refunds for Student Finance overpayment

Did you know that over 100,000 graduates have previously been owed money by the Student Loans Company for overpaying or repaying their loans too early? And you could be one of them!

Credit: kamui29 (background) – Shutterstock

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 the Student Loans Company (SLC) had prematurely taken Student Loan repayments from over 100,000 graduates, and that those affected were eligible for refunds, 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!

Why might you have overpaid your Student Loan?

There are a few reasons why you may have overpaid your Student Loan, including:

1. You started repaying your Student Loan early

   You shouldn't start paying back your Student Loan until the April after you graduate. So, if you graduated in July 2022, you would have started paying off your loan in April 2023, giving you an eight-month break before payments are deducted from your salary.

   This is the case for undergraduate and postgraduate students alike.

   However, 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.

2. You repaid your Student Loan despite earning under the threshold

   Even after you've become eligible to repay your loan, you won't make 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.

   Find out the repayment threshold for your loan in our guide to repaying your Student Loan.

   Student Loan repayments are usually automatically deducted from your salary before you get paid.

   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 over the years. You can see the previous Student Loan repayment thresholds on the gov.uk website.

   But whatever the threshold is, the bottom line is that, unless you are (or were) a part-time student, nobody should be repaying their Student Loan before the April after their graduation.

   Once again, if you are 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.

3. You've been put on the wrong Student Loan repayment plan

   Each repayment plan has a different repayment threshold. For example, Plan 1's threshold is quite a bit lower than Plan 2's (£20,195 compared to £27,295).

   Unsure what Plan you're on? These are the plans for undergraduate loans:

   You got your loan from...	You started uni between 1st September 1998 and 30th August 2012	You started uni between 1st September 2012 and 31st July 2023	You started uni on or after 1st August 2023
   England	Plan 1	Plan 2	Plan 5
   Northern Ireland	Plan 1	Plan 1	Plan 1
   Scotland	Plan 4	Plan 4	Plan 4
   Wales	Plan 1	Plan 2	Plan 2

   Note: There is a separate plan for Postgraduate Loans from England and Wales.

   It could be that your employer wrongly assumes you're on Plan 1 when you should actually be on Plan 2. This can happen since the Government's PAYE guidelines state employers should make Plan 1 deductions if they're unsure what plan you're on.

   Alternatively, there could be a mistake in the Student Loan section when filing the HMRC starter checklist when starting a job.

   Either way, being put on Plan 1 when you should be on Plan 2 means you'll be making repayments sooner than you should.

4. 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 repayment threshold, you'll be entitled to a Student Loan refund.

5. You made repayments after fully repaying your Student Loan

   Due to some issues with how the Student Loans Company and HMRC share data with each other, there have been a number of reported instances of graduates paying off their Student Loans in full but continuing to make repayments.

   This issue only affects people who are close to repaying the balance in full but, 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. Call the SLC to sort it out.

And keep in mind that the reason for accidentally overpaying your Student Loan could be a combination of two or more of the factors mentioned above.

Why do Student Loan overpayments happen?

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 Loans 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 Loans 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!

Here's an overview of how much people have over-repaid, how many have received the refund and how many still have pending refunds between 2018/19 and 2020/21:

If you think you might be due a refund due to overpaying your Student Loan, check with SLC. Or, if they've already contacted you to let you know you've over-repaid, follow their instructions on how to receive the money you're owed.

Average Student Loan refund

We're not talking about small sums here!

The average overpayment in the 2018/19 tax year was £561, while in 2019/20 it was £425 and in 2020/21 it was £377.

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. If she hadn't, she could 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 claim a Student Loan refund

There is no set way to check whether you've overpaid your Student Loan. But if you think you either repaid early or while under the threshold, it should be a simple case of finding old payslips from the relevant time and checking the Student Loan repayment section (see the picture above).

But even if you have no hard evidence and are just very suspicious that you've overpaid, contact the SLC. You can do so by calling 0300 100 0611 (or 0300 100 0370 from Wales and +44 141 243 3660 from overseas) or contacting them via Twitter or Facebook. Explain that you think some Student Loan repayments were taken from you incorrectly and that you'd like to request a refund.

It's best to have a few bits of paperwork to hand to make the process as quick as possible:

• Your payroll number
• PAYE reference number
• Payslips.

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!

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.

Is it worth getting a Student Loan refund?

You may be thinking, "why get a Student Loan refund if you're going to have to pay it back at 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, you probably won't get close. For all the many failings of the Student Finance system in this country, the repayment system isn't too bad.

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 should always be fairly 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 our guide to Student Loan repayments for more info).

As such, the IFS (Institute for Fiscal Studies) estimates that 83% of students with Plan 2 loans 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 that 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

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?