Martin Lewis: 5 Million Brits Could Be Owed £100s in Student Loan Refunds

Financial expert Martin Lewis is urging UK graduates to check if they are owed hundreds of pounds after a flaw in the student loan system has led to millions overpaying.

According to the consumer champion, at least five million individuals may have been affected by historic overpayments, with over a million of those occurring in the 2024/25 tax year alone. The issue is not due to miscalculation of interest or employer error, but a simple yet costly discrepancy in how the automated payroll system operates.

The Payroll Trap: How Overpayments Occur

Repayments are often deducted automatically based on what you earn in a single month, even if your total income for the entire year is below the legal threshold. Fortunately, identifying whether you are at risk is straightforward, and reclaiming what could be a significant refund is simpler than many realise.

Did You Overpay? Check If You're Owed a Refund

The key to knowing if you have overpaid lies in your total earnings for a single tax year, which runs from 6 April to 5 April.

If you are on Plan 2 — the most common loan for English and Welsh students who started university after 2012 — you only need to repay if you earned over £28,470 in the tax year. However, the system begins deducting payments if you earn more than the monthly equivalent of £2,372. This payroll 'trap' is the root of the problem.

You are most at risk if you only worked part of the year — a common situation for recent graduates or those taking a career break. For example, earning £36,000 a year equates to £3,000 a month, which triggers repayments. But if you only worked for nine months, your total earnings of £27,000 fall below the annual threshold, meaning you are owed back every penny.

The same applies to those with variable income, such as freelancers or sales staff on commission. High-earning months can trigger repayments, but a lower overall annual income means you have almost certainly overpaid. The same applies to a one-off bonus that pushed a payslip over the limit, which could entitle you to a refund.

Why the System Gets It Wrong

It's crucial to understand these overpayments are not your fault, nor an employer mistake. They stem from the UK's automated PAYE system, which calculates repayments based on each payslip individually, ignoring your total annual income.

These overpayments are happening against the backdrop of the UK's total student loan debt, which now stands at a staggering £266.6 billion for higher education borrowers in England, according to the latest figures from the Student Loans Company.

The size of this system creates a blind spot where individual circumstances are often missed. This fundamental flaw leads to over a million people overpaying each year, making it vital to check your own records.

How to Claim Your Refund

Fortunately, reclaiming overpaid money is often just a phone call away.

One MoneySavingExpert.com reader shared success: Caroline emailed in August, saying, 'I was amazed to get a £949 refund from the Student Loans Company, as I assumed I had paid the correct amount over the years. It was a very easy process and the refund went straight into my bank account.'

To start, gather your payslips or P60 for the relevant tax year to confirm your total gross earnings. Having your Customer Reference Number (CRN) is also helpful.

The most direct method is to call the Student Loans Company (SLC) on 0141 306 2000. Explain that you believe you have repaid your student loan despite earning less than the annual threshold for a specific year. The SLC will review your record and process any refund owed.

The UK's student loan system is vast and often impersonal, but individuals are not powerless to correct errors. Martin Lewis's warning highlights that this is a widespread issue affecting millions of graduates.

So, are you one of the five million who overpaid? It might be time to check that old payslip — you could be hundreds of pounds richer.