Check to see if you’re owed refunds from the Student Loan Company (Picture: Getty)
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.
Some graduates have seen repayments taken despite not earning over the threshold (Picture: Getty Images)
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.’
Depending on what plan you’re on, there could be long-term benefits to not getting a refund (Picture: Bloomberg …read more
Source:: Metro
