Student Loan Overpayments: Can I Get a Refund?

More than one million people overpaid on their student loans in 2023, according to a Freedom of Information request. If you discover that you've paid too much, you can use the Student Loan Company's refund request form to get back what they owe you.

Can you overpay your student loan?

You earned less than the repayment threshold

You start making student loan repayments when your annual salary is above a certain limit. The income thresholds for repayment are, according to the different plan types:

• Plan 1 loan: £24,990 per annum
• Plan 2 loan: £27,295 per annum
• Plan 3 loan: £21,000 per annum
• Plan 4 loan: £31,395 per annum
• Scottish loan: £21,000 per annum
• Plan 5 loan (post-September 2023 in England): £25,000 per annum.

However, if your employer pays you monthly, the system doesn't always work perfectly. 

Let’s say that you earn more than the monthly equivalent of the annual threshold in any given month. Your employer will then start deducting student loan repayments from your pay. This can happen even if your total annual income ends up below the repayment threshold.

For example, if you had a Plan 2 loan and were on a wage of £20,000 per annum. After nine months, you got a new job at £30,000. 

Because your annual wage is now over the Plan 2 limit, your new employer will start to pay off your loan from your salary. That's despite the fact that your total annual earnings will not go over the £27,295 a year threshold.

You can also end up repaying your loan when you don't need to if you have an irregular income pattern. This could be because:

• You work seasonally and earn more in some months than others
• You take time off for parental leave or due to illness meaning your income goes down for part of the year
• You receive a large bonus or a commission payment

In these cases, you might go over the monthly threshold in one or more months which then triggers your loan repayments to start. This is even though your total annual income is below the repayment threshold.

Your loan was already fully repaid

When you're within a year of paying off your student loan, the Student Loan Company (SLC) will write to you.

They'll recommend you make your final repayments by direct debit from your bank account. Up until now, your employer would have done this for you.

If you've moved house and not told the SLC, you might miss the letter. If that’s the case or you don’t show the letter to your employer, they will continue to make payments based on your pay slip. 

You have to tell your employer that you've repaid your student loan or they'll just keep making deductions.

You're paying for the wrong plan

Sometimes, you might be on the wrong repayment plan.

If you went to University after 1998, you'll have a Plan 1, 2, or 4 loan. The type of student loan you take out determines how much and when you repay.

The Government tells employers to assume that you're on Plan 1 unless you tell them otherwise. Another reason you might be on the wrong plan is that you gave the wrong information in the student loan section of your P45 starter checklist.

There is also the chance you might have paid too little if you're on a Type 2 repayment plan but have a Type 1 loan. Thankfully, you won't have to make up the shortfall.

You paid before repayments were due

You don't have to start repaying your student loan until the April after you graduate.

However, many ex-students start paying off their student loans before then.

That's either because:

• They didn't complete the student loan section on their P45 starter checklist correctly
• Their employer made a mistake with their details when adding them to the payroll system

How to check student loan overpayments

To check your student loan balance, log into the Government portal.

You'll need your email address, customer reference number, password, and secret answer to gain access.

You can check your balance here, see what your remaining balance is, set up a Direct Debit and change your bank and address details.

How to reclaim a student loan repayment

To access the online student loan refund form, you can log into the Government portal. 

There, you can ask for a refund if what you earned in the previous year was under the threshold. The SLC will also check whether they owe you any refunds from previous tax years.

You can only request refunds from previous tax years and not the current one. You have to wait until the end of the current tax year before you can claim.

If you are due money because you continued paying in after you paid off the loan, the SLC will contact you and pay what they owe you into your bank account.

You'll need to get in contact with the SLC on 0300 100 0611 to claim your refund (0300 100 0370 in Wales) if:

You're on the wrong payment plan: Download an active plan letter and contact the SLC if the plan shown in the letter doesn't match the plan your employer has.

You started repayments too soon: Let the SLC know what's happened when you get in touch. Try to have your PAYE reference number, payroll number, and old pay slips to hand.

How long does a student loan refund take?

Once the SLC tells you that they have your student loan overpayment refund request, they will reimburse you in around 28 days.

Overpaying your student loan FAQs

What if my monthly student loan payments are too much?

If you’re struggling to make student loan payments, it might be a good idea to defer it.

Currently, you can apply to postpone your loan payments for 12 months. This does not apply to high earners as you must earn £38,255 or less to be eligible.

You shouldn't call the Student Loan Company to arrange this. Instead, you need to contact your loan provider on:

• Thesis Servicing: 0333 004 5045
• Honours Student Loans: 0333 033 7257
• Erudia Student Loans: 0333 033 7188

If you defer on your loan, this won’t appear in your credit report.

Can I make overpayments on my student loan?

You can pay extra on your student loan but all this will do is bring down the interest rate you pay.

The monthly payment you make will remain the same as the SLC links the level of payments to your earnings. Plus, you're not able to claim back any intentional overpayment. It's hard to see how it's worth making extra student loan payments instead of hanging onto the money yourself.

Should I clear my student loan if I have enough money?

Certain analysts think that it’s not worth paying your student loan off early. They believe that settling a loan in full only really benefits high earners. Lower earners should think about building up savings for a house or other major purchase for example. Just like you had to budget at university, you need to budget for your career and life.