Martin Lewis is urging people who left university after these years to claim money back if they paid their student loans when they shouldn’t have.
The money guru has issued advice to the approximately four million people who in the past four years have paid back their student loan when they didn’t actually have to and should get the money repaid to them.
This is because of quirks in the student loan repayment system which could see repayments taken from you even when you don’t actually owe money and you will likely never repay your loan, so the amount it takes off the balance is a literal waste of money.
Martin Lewis said: “Just like millions of people can reclaim tax overpayments, many university leavers can reclaim unwittingly overpaid student loans.
“If you voluntarily overpay, you can’t get the money back, but if you overpaid and it was not your fault, you can get the money back.”
Martin then set out that it’s ‘likely’ that more than 4 million overpaid and ‘many more people will have done so before that’.
Martin explained that some people will have repaid the loan in some months, even though they didn’t earn enough that tax year.
This can happen because the loan repayment is calculated based on your monthly payslip amounts, rather than checking against your actual annual pay. That means that if you have a single larger month for earnings – such as working overtime or taking a bonus, or only working some months in the year – you will have been charged student loan repayment on that or those months even though you didn’t earn enough to pass the annual threshold over the full year.
That means that you won’t be paying down your student loan because you’re not earning enough to ever clear it but you have lost money you didn’t need to spend on repaying it in those outlier months.
Because if you’re never going to pay it back before it’s wiped off, any money spent making repayments is effectively wasted.
Martin added: “Check if you repaid some of your loan even though your total earnings were below your plan’s earning threshold.”
Martin set out that you need to check on SLC which plan you’re on, and what its respective repayment threshold is.
Plan 1 is a loan for people at university before September 2012, Plan 2 is for those who went to university after September 2012, Plan 5 is for students who started in August 2023 onwards, and Plan 4 is for Scotland and they all have different repayment thresholds ranging between £24,990 for Plan 1 up to £31,395 for Plan 4.
Although mature students can go to university much later, or after a gap year, those on Plan 1 going to university straight after college are likely to be born before 1994, while those in the same situation on Plan 2 are likely born after 1994.
Martin added: “Effectively if you didn’t earn over the threshold in a year, you should not have paid.”