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Have you overpaid your student loan?

Written by: Emma Lunn
More than 100,000 graduates overpaid their student loans last year because they were on the wrong payment plan, according to (MSE).

One reason for so many graduates paying too much is that they were recorded by their employer as being on the wrong type of loan plan.

Government guidance say employers should assume staff they pay via PAYE are on a ‘Plan 1’ student loan, unless they are told otherwise.

‘Plan 1’ student loans normally apply to those who started university before 2012. These graduates start making repayments at much lower earnings than those who have ‘Plan 2’ loans taken out after 2012.

The Department for Education, which is responsible for this policy, told MSE the guidance was in put place to stop people accruing extra interest and building up the amount of money they owed.

Data obtained by MSE under the Freedom of Information Act (FOI) from the Student Loans Company showed in the year to April 2020, 102,658 graduates and other borrowers had Plan 1 deductions taken when they should have been on a Plan 2 loan.

These workers have paid back too much – but they can reclaim their overpayments.

How to reclaim your money

The first step is to tell your employer so the issue is fixed for the future. You can download a copy of your plan type on the Student Loan Company website and can hand this to your employer.

If you were having payments taken as if you were on Plan 1 when actually you were on Plan 2, you’ll need to contact the Student Loans Company to arrange a refund.

You can call the Student Loans Company on 0300 100 0611 (or +44 141 243 3660 from overseas), explain your situation and ask to reclaim the money you’re owed.

Is it worth reclaiming the money?

The student loan interest rate is as high as 5.6% on Plan 2 loans – so many people might think overpaying a good thing as it reduces the interest.

However, Plan 2 student loan repayments act far more like a tax than a debt. Just like a tax, if you’ve overpaid, it’s worth getting the money back.

Martin Lewis, founder of, said: “The stats show the huge majority (83%) of those in England on Plan 2 loans are unlikely to clear their loan in full in the 30 years before it’s wiped (a higher proportion of those in Wales, where the loan is lower, will).

“For them, overpaying will simply mean paying more unnecessarily, as the amount you pay will just be fixed over 30 years as a set proportion of income. Therefore, taking the overpayment back won’t result in you paying any more in future, so it is a pure gain – do it.

“The only people who may not want to overpay are very higher earners (the top 17% of graduates) who will be likely to clear the loan within the 30 years. If in doubt though, and you need the cash (to pay off other debt or a mortgage, for example), reclaim your overpayments.”

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