At least 643,873 former students paid too much back to Student Loans Company (SLC) because they were earning too far below the annual repayment threshold, it’s data showed.
With some students having more than one student loan after starting different degrees, the student money group believes there could be many more who have paid more than they should have.
More than 17,000 students were paying their student loans on the incorrect plan. This is based on the year you started university and it is the responsibility of an employer to have the correct one of either Plans 1, 2, 4 or 5. Plan 3 is for postgraduate degrees.
However, being on the wrong plan does not always mean you’ve overpaid as you could be on Plan 1 with the annual salary threshold of £24,990 but should have been on Plan 2, where the amount is £27,295. You will not have to make up for any underpayments in this scenario but will be put on the correct plan once it has been identified.
A further 59,251 people overpaid because they had already cleared their balance in full and 28,720 graduates were deducted a student loan repayment too soon after graduating.
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The student loan can only be deducted from your salary in April after you graduate. So, if you were hired before then and a student loan was coming out of your account, like any of the overpayment circumstances – you can claim a refund.
Usually, once your balance is cleared, an overpayment will be redressed automatically, but for other reasons, this is not always the case.
How to claim back a refund
An app from HMRC launched in May 2024 to simplify the process of claiming back overspends on student loans. Since that date, £61.6m has been returned to 248,000 graduates.
Alternatively, depending on the method you overpaid, SLC may contact you directly, or you might need to check old payslips and log into your student loan repayment account.
Almost two million people owe more than £50,000 in student loan debt, with thousands owing over £100,000.
Tom Allingham, student money expert at Save the Student said: “Off the back of a mixed Autumn Budget, and with the cost-of-living crisis still looming for many, there’s arguably never been a better time to check if you’re owed £100s in the form of a student loan repayment refund.
“The most common reason for overpayment – doing so despite earning below the repayment threshold – tends to occur when a graduate’s salary has varied throughout the year.
“A graduate may earn below this amount, but by working extra shifts, receiving a bonus or moving to a higher-paid role part-way through the year, they could suddenly edge past the weekly or monthly threshold, triggering a repayment.
“However, if their total earnings at the end of the financial year still fall below £27,295, they’re entitled to a refund of any repayments made in that period.”
Allingham urged that no matter how little the amount might be, you should claim a refund as, in most Plan 2 loans, the money will not be paid off before it is wiped after the 30-year limit.
He added: “I’d also argue that graduates with other types of student loans should consider requesting a refund too.
“Although they’re more likely to repay their loans in full, many are still feeling the squeeze of the cost-of-living crisis, and reclaiming a few hundred pounds could be a welcome boost.
“That said, I would encourage these graduates to look at how likely they are to repay in full, as they may be happy to overpay in the short term and clear their balance earlier.”
