1.1 million student loans overpaid in last tax year, Martin Lewis says

Bucks County residents who graduated from college may be owed money back from the government. Personal finance expert Martin Lewis stated that over 1.1 million student loans were overpaid in the last tax year. He noted that millions more were overpaid in previous years. Lewis sent this update to subscribers via email earlier this week. The message confirmed that checking for errors remains worthwhile in 2026. His team previously identified this issue in a late 2023 investigation. That earlier report found that more than one million graduates had overpaid their loans. The initial discovery caused high call volumes for Student Finance phone lines.

One specific case involves a graduate named Fiona. She shared her experience with Lewis's MoneySavingExpert team. An error in her account resulted in overpayments totaling £3,773. Other borrowers reported smaller but similar refunds. The process to claim the money costs nothing to the borrower. Lewis emphasized that there is no time limit for reclaiming overpaid amounts. His team stated that borrowers can still file claims even if the error occurred ten years ago. This applies to borrowers in England, Scotland, Wales, and Northern Ireland. The specific repayment thresholds vary by nation and loan plan.

A graduate named Lisa described her recent experience. She spoke with the agency for 15 minutes on the phone. The call resulted in a refund of £555. Lisa attributed the overpayment to her maternity leave. She said the timing of the refund was helpful. She stated, "Thanks so much, couldn't have come at a better time." This example illustrates how quickly some claims can be resolved. The refund covered money deducted from her wages during a period when she should not have been paying.

There are four primary reasons why a borrower might be entitled to a refund. The first involves months where income was below the repayment threshold. Borrowers may have paid monthly despite low annual earnings. The second reason is an incorrect payment plan. This can happen due to an employer error or a mistake on a starter checklist. The third reason is repaying too early. Deductions may have started before the official repayment date. The fourth reason is paying after the balance was cleared. Extra money was deducted from wages even though the loan was fully paid.

To begin the process, borrowers should gather old payslips. These documents should include the payroll number and a PAYE reference number. If these papers are unavailable, many claims can now be processed online. Some claims still require a phone call. Lewis explained that student loans function more like a time-limited tax on graduates. The specific interest rates depend on the loan plan. Most borrowers are on Plan 2. This plan applies to those who started university in England between 2012 and 2022. This academic year, the interest rate ranges from 4.1% to 6% based on income.

Lewis noted that government statistics show most borrowers will not clear their loans. Two-thirds of people, particularly those with low or middle salaries, will not pay off their loans. These loans are wiped out after 30 years. In that scenario, overpaying smaller amounts does not reduce future payments. Borrowers simply continue paying 9% of their income over the threshold for the full 30-year period. Lewis argued that if overpaying offers no benefit, borrowers should reclaim that money.