Martin Lewis Says 'Millions' Of People Could Claim Thousands Of Pounds In Student Loan Refunds

I'm all ears...
Martin Lewis on ITV
Martin Lewis on ITV

Martin Lewis, the personal finance expert, recently shared a step-by-step guide on how graduates who left college in the past ten or 15 years can claim back money from their student loans.

The Student Loans Company, the government-owned organisation in charge of student loans, told Martin Lewis that over a million people paid too much on their loan repayments in the 2022-23 tax year.

Considering that this is on top of the people who overpaid in previous years, Lewis said on the Martin Lewis Money Show Live, “There’s no limit to how far back you can claim student loan overpayments, so there are likely millions of people who are owed money.”

So, here’s his advice on the topic:

Student loans don’t work like other loans

For most loans, you’re better off overpaying. That’s because most loans accrue interest, so the faster you get rid of it, the less you end up paying overall.

Most debt is also never absolved until it’s repaid, so you’ll end up giving the money back one way or another ― so you’re better off paying the lower-interest options earlier on.

But student loans are different (at least in the UK). They’re erased after a certain period of time (usually around 30 years), and only 20% of people who started university between 2012 and 2022 are likely to pay their loan off in full before it gets wiped out.

“Student loans don’t work like normal loans, they work more like a graduate tax,” Lewis shared. “In that case, if you’ve overpaid and you take it back, it doesn’t have any impact on what you pay later so it’s absolute cash in your pocket, you may as well take it back and it also helps your cash flow.”

To be clear, it doesn’t give you extra money per se ― you’ll still have to pay it back according to your income level. But it does mean you’ll have more liquid cash in your account now, which could be handy given how close we are to Christmas.

However, the option isn’t for everyone, Lewis says. “If you’re one of those higher earners who would clear it in the 30 years, then you probably don’t want to take the cash back, because it reduces the interest you pay,” he warns.

What do I have to do?

Martin Lewis advises you to collect your old payslips, payroll numbers, and PAYE reference numbers before asking the Student Loan Company for a refund.

Once you’ve got all your details (they’re not absolutely necessary, but they will speed the process up and help you to check if your suspicion that you’ve overpaid is correct), you can use their online Refund Request form to see whether you’re due cash back.

But Lewis advises you shouldn’t apply on the off-chance you’re due money ― do your own research before sending the form in.