Over 850,000 graduates owed refunds for ‘incorrect’ loan repayments, according to new data
Only two per cent of eligible graduates have claimed a refund so far
Over 850,000 graduates who have overpaid student loans could be owed refunds after “incorrect” repayments.
Data collected by Save The Student from a Freedom of Information Request found that over 850,000 graduates made unnecessary student loan repayments in the financial year 2021/22, with the majority not claiming refunds.
In fact, only two per cent of graduates who overpaid student loans have claimed a refund, independent reports.
Figures have identified a further 39,000 graduates to have mistakenly made early repayments, with an additional 50,000 continually making repayments, despite having already cleared their balance. Another 200,000 grads are said to have repaid their student loans dept under the incorrect plan.
The FOI request, sent to the Student Loans Company, found the total repayment value owed to graduates exceeded £100 million.
In many cases, graduates who continue to make repayments after clearing their balance are automatically issued a refund, although Save The Student have informed that this might not always be the outcome for those that overpay.
The site recommends that graduates check their eligibility for claiming a refund, including cross-referencing old pay slips against repayment rules and thresholds for each year. For graduates who no longer have access to old payslips, eligibility can be checked by calling the Student Loans Company.
Tom Allingham, Save The Student’s money expert, said: “If you believe you may have made incorrect student loan repayments, it’s usually worth claiming a refund.
“Graduates with Plan two loans in particular should seek to do this, as around 80 per cent of them are expected to have some or all of their balance wiped by the government after 30 years. As such, there’s little danger of graduates claiming money back, only to repay it again later”.
Tom added how repayments are calculated in accordance with monthly or weekly earnings and how bonuses or overtime payments can result in graduates making repayments unknowingly.
He said: “Take England and Wales, for example, where the Plan two repayment threshold is currently £27,295 a year. Depending on how often you’re paid, repayments are made in accordance with the monthly or weekly equivalents of this threshold. So, if you work extra shifts, receive a bonus or move to a higher-paid role part-way through the year, you may start making repayments.”
Graduates who may have overpaid student loans are urged to check whether they’re eligible for a refund regardless of what repayment plan they’re on, with Tom advising them to consider how likely they are to repay their loan, and to decide if they’d rather forgo a refund and clear their balances earlier.