Financial guru Martin Lewis is issuing an urgent plea to millions across Britain, urging anyone with outstanding student debt to immediately check their accounts as a staggering five million people could be owed refunds.
Why You Might Be Overpaying
During his latest ITV programme, The Martin Lewis Money Show, the expert explained the primary reason people overpay occurs when their annual earnings haven't actually reached the minimum repayment threshold for that tax year. This situation frequently arises from life events that reduce income.
Your income might have dropped significantly due to taking maternity leave, starting a job part-way through the tax year, or having a period of unemployment. In such cases, the Pay As You Earn (PAYE) system may have continued deducting student loan repayments from your monthly salary, even though your total earnings for the entire tax year fell below the required amount.
The Plan 2 Loan Quirk
Lewis focused particularly on Plan 2 student loans, which cover the majority of university attendees in England who studied between 2012 and 2022, and students in Wales from 2012 onwards.
For these individuals, the current repayment threshold stands at £28,470 per year. Repayments are calculated at 9% of any earnings above this annual amount. However, the payroll system operates differently, taking money based on your monthly pay.
"£28,470 a year equates to £2,372 a month," Lewis clarified. "You repay 9% of everything you earn above that amount each month."
A Clear Example of Overpayment
To illustrate the problem, Lewis provided a concrete example. Imagine a graduate who begins a job in July with a respectable annual salary of £36,000 (£3,000 per month before tax).
For the remaining nine months of the tax year, they would repay approximately £56 each month. However, their total earnings for that tax year (from April to March) would only amount to £27,000.
This falls below the annual threshold of £28,470, meaning they shouldn't have repaid anything at all. In this scenario, they would have overpaid by around £508 and would be entitled to claim every penny back.
How to Claim Your Refund
If this sounds familiar, there are straightforward steps you can take to get your money back. First, you need to confirm whether you are actually due a refund.
The simplest method is to call the Student Loans Company directly on 0300 100 0611 and ask if you are owed any money. If you are due a refund, they will inform you of the amount and can typically process the repayment over the phone.
Alternatively, if you still have your login details, you can complete a refund request form on the Student Loans Company website. Either way, acting now could put hundreds of pounds back in your pocket.
