Money saving man Martin lewis revealed that more than 100,000 people overpaid their student loans and could get the money back if they needed it.
Basically there are two separate plans for people to pay off their student loans – anyone who started college before 2012 will be on the old “Plan 1”, while those who started later will be on “Plan 2”. “.
The problem is, many companies mistakenly put people on Plan 1 when they should be on the other. Plan 1 takes more of your money each month.
If you thought paying more would be good for you in the long run, that really isn’t the case, as the repayment amounts don’t change based on what you own with the balance being wiped out after 30 years anyway.
Speaking to MirrorMartin Lewis said: “The only people who might not want to pay too much are the very high income people (the top 17% of graduates) who will be likely to write off the loan within 30 years.
“When in doubt and you need the money (to pay off other debts or a mortgage, for example), collect your overpayments.”
He continued, “It’s understandable that many think that paying too much is a good thing because it reduces interest.
“[But for most people] overpaying simply means paying more unnecessarily, as the amount you pay will simply be fixed over 30 years as a fixed proportion of income.
“Therefore, recovering the overpayment will not make you pay more in the future, so it is pure gain – do it.
“Plan 2 student loan repayments are a lot more like a tax than a debt – and just like a tax, if you’ve overpaid, it’s worth getting the money back.
“Statistics show that the overwhelming majority (83%) of people in England with Plan 2 loans are unlikely to write off their loan in full in the 30 years before it was written off (a higher proportion of those of Wales, where the loan is lower,). “
Based on data obtained by Lewis’s company MoneySavingExpert, via an access to information request, the Student Loans Company (SLC) shows that between April 2019 and April 2020, 102,658 graduates and other borrowers had plan 1 deductions when they should have been on a plan 2 loan – and therefore also repaid a lot.
You can check if you are paying too much simply by asking your employer which plan you are enrolling in.
When it comes to recovering, you can upload a copy of your plan type to the Student loan company website and can give it to your employer. You can also call the Student Loans Company on 0300 100 0611 (or +44 141 243 3660 from abroad), explain your situation and request a refund of the money you are owed.
Alternatively, you can send the SLC a private message via Facebook.