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Millions of graduates could be owed £100s from over payments on their student loans

Graduating from university is a brilliant achievement, with the qualifications earned after many hard years work helping many get into brilliant jobs.

But one thing that is a necessary evil once you graduate is paying off the loans that helped fund your education.

While graduates only start paying their loans off once they are earning over a certain threshold, Martin Lewis and the team at MoneySavingExpert have found millions of grauates could be owed hundreds of pounds from overpayments.

In a recent FOI, they found that ‘over four tax years (6 April 2019 to 5 April 2023) likely more than 4 million overpaid, and many did before & since’.

And Martin Lewis has outlined the four big reasons why people may have overpaid on their student loans.

Reason 1:

‘You’ve repaid the loan in some months, despite not earning enough in the tax year’

  • Graduates should only start repaying their loans once they earn over the Annual salary.
  • But student loans are taken straight from payroll monthly, so if you earn over the monthly equivalent it will be taken from payroll.
  • So despite your annual income not being over the threshold, some will have money taken monthly.
  • For example, if you only work nine months of the tax year but your salary is above the threshold then this is can be very common.
  • But if you get a bonus that takes you over the annual threshold then you can’t ‘reclaim the excess, as you have earnt over the annual threshold’.

Below are the different plans and what the thresholds are:

Plan 1 – Eng: 1998-2011, Wal: 1998-2011, NI 1998- today incl postgrads – threshold of £24,990/yr (£2,082/mth)

Plan 2 – Eng: 2012-2022, Wal: 2012-today – threshold of £27,295/yr (£2,274/mth)

Plan 3 – Eng: Postgrads, Wal: Postgrads – threshold of £21,000/yr (£1,750/mth)

Plan 4 – Scot 1998-today, incl postgrads – threshold of £31,395/yr (£2,616/mth)

Plan 5 – Eng 2023 onwards (won’t be repaying yet) – threshold of £25,000/yr from earliest April 2026

Reason 2:

‘You’re on the wrong student loan payment plan by defut’

  • Unless you specifically tell your company which plan you are on, they will automatically defult to Plan 1.
  • Millions are on the plan which means you only repay when you earn £27,000, but if they’re automatically placed on Plan 1 then they will start paying back sooner because the threshold is lower.
  • If you find you are on the defult setting then you should speak to your payroll team to fix the issue and recliam.

Reason 3

‘You started repaying your loan too early’

  • Graduates should only become eligible to repay their loans in the April after they graduate from their course.
  • But if somewhere along the line, you or an employer has got your graduation date wrong, you could have repayed too early, and are due the money back.

Reason 4:

‘You had money deducted after the loan was fully paid’

  • Student loans are wiped after a set period of time, which is often after 30 years for those currently repaying but can vary.
  • But due to PAYE (Pay-as-you-earn) timings, you could end up paying after your loan is cleared.
  • You won’t need to reclaim this as it will automatically be refunded but it might be worth setting up a direct debit in the last couple of years to avoid this situation.


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