Martin Lewis, the renowned money-saving expert, has urged individuals who started working between 2012 and 2022 to investigate potential refunds on their student loans. During the latest episode of The Martin Lewis Money Show Live on ITV1, broadcast on November 11, 2023, he highlighted a significant anomaly within the student loan repayment system that might entitle many graduates to reclaim overpaid amounts.
According to Lewis, the rules for repaying student loans are straightforward: repayments are only required if an individual earns more than a specified annual threshold. For those under the Plan 2 repayment scheme, which primarily affects graduates from universities in England and Wales who began their studies from 2012 onwards, the threshold is set at £28,470 per year. This equates to 9% of any earnings above that figure.
In his explanation, Lewis used a practical example to illustrate how graduates could be impacted financially. He described a scenario where a new graduate begins work in July with an annual salary of £36,000, or £3,000 monthly before tax. For this individual, the repayment obligation would begin based on monthly earnings, effectively requiring them to pay 9% on earnings above the monthly equivalent of the threshold, which is approximately £2,372.
For the remaining nine months of that tax year, the graduate would owe roughly £56 each month based on their earnings. However, given that their total earnings for the tax year would amount to only £27,000, which is below the annual threshold, they would not actually need to repay their student loan. Lewis emphasized the importance of this detail, stating, “You earned less than the threshold; you don’t have to repay your student loan. Here are the payments that you made, £508; you can reclaim the £508. This is big, for many people.”
This issue predominantly affects individuals who work only part of the year, those on commission, or those with variable incomes while still remaining under the threshold. To facilitate the refund process, individuals can complete a refund request form available through the Student Loans Company (SLC) website or via the SLC Repayment app.
The SLC has acknowledged that high demand for their services has led to longer call waiting times for their repayment helpline. To streamline the refund request process, they have implemented an online form that is now the recommended method for customers seeking refunds. The SLC provided further instructions, stating, “Once completed, customers can email the form to [email protected].”
After submitting the form, customers will receive an automated confirmation, with refunds typically processed within approximately 28 days. The SLC has advised that customers should refrain from contacting them during this processing period. If further information is required or if a customer is found ineligible for a refund, the SLC will reach out directly to provide clarification.
As Lewis continues to advocate for financial awareness, graduates from the specified years are encouraged to check their repayment status and examine whether they may be entitled to a refund from the Student Loans Company. This opportunity could represent a significant financial benefit for many individuals navigating the complexities of student loan repayments.
