Money Saving Expert urges former students to check if they are owed money
Martin Lewis, the renowned Money Saving Expert, has issued a warning that one million people in the UK could be owed thousands of pounds in cash. He is urging anyone with an outstanding student loan to check if they are entitled to reclaim their money. According to Lewis, there are three main reasons why people may be owed money.
Threshold Errors
One of the main reasons people may be owed money is due to threshold errors. Some former students begin paying back their loans when they don't earn enough to meet the repayment threshold. This can happen if they earn below the threshold in certain months, even if they earn enough over the course of the year. Only those who earn below the threshold for the entire year are eligible to claim back the overpayment.
Wrong Repayment Plan
Another reason for potential overpayment is being put on the wrong student loan repayment plan. Many people have been defaulted to Plan 1, which requires repayment if the earnings exceed £22,000. However, the majority of borrowers should be on plans where repayment only begins if earnings exceed £27,000. It is important for former students to check which plan they are on and correct any errors.
Early Repayment
Some borrowers may start repaying their loans earlier than they should. According to Martin Lewis, those with student loans are only eligible to start repaying from the April after they leave university. If a company has incorrect information or doesn't know when a borrower left university, they may start repaying earlier than necessary. In such cases, the overpayment can be reclaimed.
Why You Should Reclaim
Martin Lewis emphasized the importance of reclaiming any overpaid amounts because student loans could be wiped after a certain period of time. While most people will have to repay for 30 years, the specific terms depend on location and when the borrower started university. For example, in some cases, loans can be cleared after 25 years or when the borrower turns 65. Lewis also noted that only 20% of people on Plan 2 loans in England and Wales are likely to clear their loan, meaning they will still have money remaining on their account. Therefore, reclaiming the overpaid amount will not necessarily reduce future repayments, unless the borrower plans to make voluntary overpayments.
How to Reclaim
There is no time limit to reclaim an overpayment, according to Martin Lewis. To reclaim, borrowers will need to collect old payslips, their payroll number, and PAYE reference number. They should then contact the Student Loans Company (SLC) on the appropriate phone number for their location. It is important to inform the SLC that an overpayment has occurred. If the necessary documents are not available, Lewis advises getting in touch with the SLC anyway, although it may slow down the process. If reclaiming due to an incorrect repayment plan, it is important to check with the employer beforehand.
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