You are here: Home - Credit Cards & Loans - News -

Workers over-repaying student loan set for automatic refund

0
Written by:
27/02/2020
The Student Loans Company is trialling automatic bank refunds to customers who have over-repaid their ‘debt’.

As part of the Student Loans Company (SLC) improvements to the repayment scheme, it is trialling automatic bank refunds to customers who have over-repaid their student loans.

It said those who haven’t opted in to the SLC direct debit scheme and have yet to respond to communications on how to claim their money back will be rolled into the trial.

Once bank details are validated, credits will show in statements as ‘SLC Receipts’.

Why can people over-repay their student loan?

It’s all to do with the way information from your employer is passed to HMRC and then reported back to SLC.

Loan repayments (on income-contingent repayments from 1998/99 onwards, currently 9% of everything earned above £18,935 a year for Plan 1, £25,725 a year for Plan 2) come out of your salary via PAYE if you’re employed or via a self-assessment tax return for the self-employed.

Historically, SLC received payment information from HMRC annually, after the end of the tax year, meaning there was a window where customers could overpay as there was a lag on the most up-to-date information being exchanged.

However, Since April 2019, HMRC and SLC have been sharing customer repayment data more frequently with SLC receiving loan repayment information as reported by employers on a weekly basis. For customers who are paid monthly, that means their repayment information is also received by SLC monthly.

Despite the improvements, there is still a chance customers could overpay due to automatic deductions being made from salaries, so it’s vital for anyone nearing the end of their loan to get in touch with the SLC to switch payments to direct debit.

‘We don’t want customers to over-repay in the first place’

Steven Darling, director of repayment and counter fraud, said: “While we’re always pleased to be able to refund customers, we do not want customers to over-repay in the first place. Repaying too much is avoidable because we ask customers to take control of the final stages of loan repayment and make the switch from repaying through their salary to direct debit. We want all of our customers to keep their details up-to-date so that we can let them know when it’s their time to put a direct debit in place and strongly urge customers to take this action.”

The government has also recently announced that a new online repayment service will go live in 2020, allowing graduates to see and manage more up-to-date information about their student loans.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

It’s time to get your finances in shape for summer, and moving your cash savings to a higher paying deal is ...

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

The experts’ guide to sorting out your personal finances in 2021

From opting to ‘low spend’ months to imposing your own ‘cooling-off period’, industry experts reveal t...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
Help to Buy ISA bonus helps fund £48bn of property purchases

The latest Help to Buy ISA statistics reveal savers received £358m in bonuses, used to finance properties worth £48.7bn in...

Close