How to Avoid Paying Too Much on Your Student Loan in the UK
In the fiscal year between 2019 and 2020, 54,516 graduates overpaid their student loans because their payments did not stop once the debt was settled.
This is according to data from the Student Loans Company. Hargreaves Lansdown’s analysis found the average overpayment to be £ 424 ($ 602). In total, £ 23.1million was overpaid.
Despite this alarming figure, the average overpayment has fallen by 30% over the past four years, and the number of people affected has fallen by 38%, after the Student Loans Company changed the system.
The massive overpayments in previous years were largely due to reimbursements being made via PAYE and until April 2019, HMRC only sent the Student Loans Company details of the reimbursements once. per year, so in the gap between full refund and sending data, millions of people overpaid.
From April 2019, it started sending employee-reported student loan information once a week, and for people paid monthly by PAYE, it sends it monthly.
Still, the number of people overpaying is a cause for concern.
“Part of the problem is that people took out these loans so long ago that their contact details may have changed, so the protections the Student Loan Company put in place to avoid overpayments won’t help them. at all, ”said Sarah Coles, personal finance manager. analyst, Hargreaves Lansdown.
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“Any advice on how to avoid overpayments will end up sitting on the carpet of a house they used to live in, or cluttering up the inbox of an email account they no longer use.
“The same goes for their bank account. Any overpayment between £ 25 and £ 750 should be automatically refunded, but if the student loans company has an old bank account on file, they can’t do it. “
The five mistakes that mean you’ll overpay
Ignore any messages from the student loans company regarding the direct debit system. Joining this is the easiest way to avoid paying too much.
Failing to keep your contact details with the student loans company up to date – including your mailing address, email, and cell phone numbers. This means that you will miss all the posts on how to avoid paying too much.
Ignore any messages asking you to pay off the full balance. It might sound like a cheeky request out of the blue, when you’ve been diligently paying back for years, but it’s designed to avoid overpayments, so if you can afford to do that, it will keep you from overpaying.
Do not sign up for the online refund service, which is the best way to check if you’ve overpaid and need to request a refund.
Do not update bank details held by the student loan company, so overpayments cannot be automatically refunded
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