Martin Lewis urges college students to examine repayments as they may very well be owed a refund

Anyone who has taken out a scholar mortgage has been urged to examine how a lot they’ve repaid as they may very well be owed a hefty refund.

Martin Lewis, the MoneySavingExpert founder, urged all these with scholar loans to examine in the event that they may very well be owed cash as over one million folks have overpaid their mortgage repayments within the final tax yr. On Tuesday’s episode of his ITV program, the Martin Lewis Money Show, he revealed how some college students have had tons of of kilos refunded to them after contacting the scholar loans firm.

The 51-year-old defined how folks can examine if they’re owed cash — with many viewers already claiming to have gotten a refund. He said there isn’t any restrict on how far again you may reclaim scholar mortgage overpayments and highlighted 4 the explanation why it’s possible you’ll be eligible.

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The first purpose is being on the unsuitable scholar mortgage fee plan. He revealed that 165,000 folks overpaid final tax yr due to this. Most college students are on Plan 2, but when your employer would not know which plan you are on, they default to Plan 1.

• Plan 1 is for college kids who began college in England or Wales between 1998 and 2011. On this plan, you repay 9% on something above simply over £22,000
• Plan 2 is for individuals who started their research between 2012 and 2022, and so they’ll pay 9% on every part over £27,295, he defined. He additionally talked about different plans, together with a brand new Plan 5, however that is for college kids nonetheless finding out

He gave an instance of how somebody would possibly overpay on their mortgage in the event that they’re placed on the unsuitable plan: “Let’s say someone should be on Plan 2, but the employer has defaulted to putting it on Plan 1 and they are earning £30,000. They should be paying 9% on everything above £27,295 – which is 9% of £2,705, which is £243, that’s how much they should repay.”

“But, they’re paying 9% above £22,000 which is 9% of £8,000 which is £719. So they would have repaid £719, but they only needed to repay £243.” He stated that was the primary examine to make.

He then highlighted the second manner it’s possible you’ll be owed cash, which he referred to as “the big one”. This is for individuals who repaid the mortgage once they did not earn sufficient to repay it. He stated 833,000 folks did this simply within the final tax yr alone.

He defined that folk with a fluctuating revenue would possibly see mortgage repayments taken out throughout months when their revenue is excessive, even when their yearly revenue is under the brink. He stated: “You only need to repay if you earn over an annual threshold for the tax year.” He added: “Your repayments are taken by PAYE based on your monthly income. Many people have variable income where they earn over the threshold in some months but they earn under the annual threshold.”

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He clarified in case your yearly revenue stays under the brink on the finish of the tax yr, then you must have the ability to declare again any funds you made in your mortgage. But he warned: “If you’re over the threshold you can’t reclaim if you have variable income, which is quite frustrating.” This signifies that even when you’re simply above the annual threshold, your repayments should still be increased than anticipated in case your revenue is especially excessive some months.

According to GOV.UK, you may ask for a refund in your scholar mortgage repayments if:

• You’ve paid greater than the entire quantity you owe
• Your annual revenue was under the brink
• You began making repayments earlier than you wanted to
• You’ve repaid greater than it is advisable to as a result of your employer had you on the unsuitable compensation plan

If you’ve got made a compensation and your revenue was under the annual compensation threshold, now you can apply to your refund on-line. You can obtain a kind from GOV.UK right here. For all different causes, you’ll need to name the Student Loans Company.

* This article was crafted with the assistance of an AI software, which quickens Daily Star’s editorial analysis. An editor reviewed this content material earlier than it was printed. You can report any errors to [email protected]