Financial expert Martin Lewis has issued an urgent alert to millions of UK graduates, revealing that a staggering number have overpaid on their student loans and are due significant refunds.
The Scale of Graduate Overpayments
In the latest Money Saving Expert (MSE) newsletter, Lewis highlighted new figures showing that 1.1 million UK graduates overpaid their student loans during the 2024/25 tax year alone. When combined with previous overpayments, this brings the total to at least 5 million people across the country who are owed refunds.
The amounts involved are substantial, with many graduates due to receive hundreds or even thousands of pounds back. One MSE reader reported receiving a £949 refund within just one week of claiming, while others have recovered as much as £3,773. The typical refund amount over the last year stood at £240.
Why Overpayments Happen
The primary reason for these overpayments lies in the income-contingent nature of UK student loans. Graduates only repay 9% of their earnings above a set threshold, which currently stands at £24,990 annually for those on Plan 1.
For employees, repayments are automatically deducted through payroll in the same manner as tax. However, because these deductions are estimated monthly, salary fluctuations throughout the tax year can easily lead to accidental overpayments.
This commonly occurs if you worked for only part of the tax year, meaning your total annual earnings fell below the repayment threshold. Administrative errors or incorrect information about your payment plan can also create discrepancies that make you eligible for a refund.
How to Claim Your Refund
Martin Lewis assures graduates that claiming back overpayments is straightforward. Whether it's an overpayment this past year or before, it's easy to get your money back, he notes in the MSE newsletter.
For overpayments made during tax years up to 2022/2023, you can request a refund directly through the government website. Simply log in using your customer reference number or email address, along with your password and secret answer. The Student Loans Company will then check for any refunds you're eligible for, dating as far back as the early 2000s, with money typically arriving in your account within 28 days.
If you suspect you've overpaid due to being on the wrong payment plan or starting repayments too early, you'll need to contact the Student Loans Company directly. Have your payroll number or PAYE number ready, which can be found on your payslips or P60 documents.
Understanding Your Student Loan Plan
Knowing which repayment plan you're on is crucial for understanding your eligibility. Here's a quick guide:
- Plan 5: For courses started on or after August 1, 2023
- Plan 2: For courses started between September 1, 2012 and July 31, 2023
- Plan 1: For courses started before September 1, 2012
Those who applied through Student Finance Wales, Scotland, or Northern Ireland should consult additional guidance on the Government's website.
The context for these refunds comes against the backdrop of significant student debt in England, where the average debt for 2024 graduates reached £53,000. Government figures suggest only around 56% of this cohort will fully repay their loans before the debt is wiped after 30 years.
There are no restrictions on how far back you can claim, though voluntary overpayments above the required amount are exempt from refunds. Given that some graduates have received substantial sums back, it's worth checking your account even if you graduated years ago.
