University graduates across the country should check if they are owed a share of £184,000,000 in student loan refunds, a campaign group has said.
Save the Students shared figures that reveal hundreds of thousands of people who took out loans during their studies have been overpaying their repayments.
They are owed refunds ranging from a few pounds to thousands.
Why are people owed refunds?
The main reason people are owed money back is that repayments have been taken from individuals despite them earning less than the minimum annual salary needed for repayments to be compulsory.
This threshold is different depending on what plan you are on. For example, on Plan 1, which includes those who were living in England and Wales and started studying between 1998-2011, the threshold is currently £24,990.
The repayment might be taken because the person has worked extra shifts or received a bonus during certain months, but they’re owed a refund because annually they still earned less than the threshold.
Another reason someone may be owed a refund is when repayments were taken before the former student was required to start paying back their loan, which – if they’re earning above the threshold – tends to be the April after graduating.
Sometimes an employer puts the person on the wrong payment plan, causing them to overpay, while it’s also happened that people have continued to pay back their student loan despite them having already cleared the full debt.
Are there benefits to not claiming the money back?
Overpayments will of course mean you owe less, but with student loans it may not necessarily mean you pay back less over time.
As Martin Lewis explains on his website, Money Saving Expert, it all depends on what plan you’re on.
He said: ‘Many are on Plan 2 loans (eg 2012 to 2022 uni starters from England), with its current 7.3% interest rate. So on the surface overpaying may look a good idea. However, the Govt’s own stats show more than three-quarters of people won’t clear these loans in full before they wipe after 30 years.
‘If so, overpaying these smaller amounts won’t usually actually reduce what you will pay in future, so you don’t gain by overpaying (the very highest earners who will clear the loans in time will gain) – so you may as well get that money back.
‘If you’re a graduate/university leaver on another plan (so not including current students), then you’re far more likely to repay the loan in full before it wipes. This is because either the repayment threshold is lower or the borrowing amount tends to be lower.’
‘That means there’s less of a long-term gain for a typical student by taking back any overpayments.’
For many, however, getting a refund, whether there’s a long-term gain or not, is worth it as the cash is needed now to pay for day-to-day living costs.
Tom Allingham from Save the Students said the money can really make a difference for some.
He told the BBC: ‘It is definitely worth doing, particularly with the cost of living crisis still lingering on a little bit, having that extra boost of cash right now could make a world of difference.’
One graduate, Martin De’Ath recently received a £396 refund. He said he was ‘definitely pleased’, though it also made him question how it could have used it in the 10 months he was without the money.
How to find out if you’re owed a student loan refund?
To check if you’re owed any money, visit the government’s Student Loan Company portal, and follow the instructions.
On Monday, the government announced university tuition fees in England will rise up to £9,535 next year to ‘secure the future of higher education’.
The previous government raised the cap on university tuition fees in England to £9,000 per year in 2012, but it has been frozen at £9,250 for domestic undergraduate students since 2017.
But Education Secretary Bridget Phillipson told the Commonsthat tuition fees will rise to over £9,500 in October 2025 and £10,500 by 2029.
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