Martin Lewis, a prominent financial expert, is encouraging individuals who started working between 2012 and 2022 to investigate potential refunds on their student loans. During a segment on The Martin Lewis Money Show Live aired on November 11, 2023, he highlighted that many graduates may have overpaid due to a quirk in the student loan repayment system.
Lewis pointed out that graduates are only required to repay their student loans if their earnings exceed a specific annual threshold, which varies based on the repayment plan. He particularly focused on Plan 2 loans, applicable to most university students in England who attended from 2012 onwards and in Wales from the same year. The repayment threshold for these loans is set at £28,470 per year, with monthly repayments calculated at 9% of income exceeding this threshold.
Many graduates, particularly those with variable incomes or who work only part of the year, may find themselves in a situation where they unknowingly overpaid their loans. Lewis provided a concrete example of a graduate who begins working in July with an annual salary of £36,000, translating to a monthly income of £3,000 before tax. For the remaining nine months of the tax year, this individual would be required to pay 9% on earnings above the threshold, resulting in a monthly payment of approximately £56. However, their total earnings for that tax year would only amount to £27,000, which is below the repayment threshold.
In this scenario, the graduate could reclaim the £508 they overpaid. Lewis emphasized the significance of this potential refund, stating, “You earned less than the threshold, you don’t have to repay your student loan. Here are the payments that you made, £508, you can reclaim the £508. This is big, for many people.”
To initiate a refund claim, individuals can complete a refund request form available on GOV.UK or through the Student Loans Company Repayment app. The Student Loans Company has acknowledged longer than usual waiting times for their repayment helpline due to a high volume of inquiries related to refunds. To streamline the process, they have introduced an online refund request form, which is the most efficient way for customers to submit their claims.
Once the form is completed, it can be emailed to [email protected]. Customers will receive an automated confirmation after submission, with refunds typically processed within 28 days. The Student Loans Company advises applicants not to contact them during this period unless further information is required or if a refund is not applicable. In such cases, the organization will reach out directly to the individuals concerned.
As many graduates may be unaware of their eligibility for refunds, Lewis’s guidance serves as an important reminder for those who may have overpaid their student loans to take action and reclaim their funds.
