How to make sure you don’t overpay on your Student Loan

Finally, the day comes when you can stop those bloody Student Loan repayments – because you’ve paid the debt – and get a full monthly salary! But those monthly sums, that normally come off your pay at work, don’t stop automatically. So how do you make this happen?

Does the Student Loan Company know you’ve paid your loan off because of modern technology? Nope. Do you just speak to HR at work and say “stop please”? Nope. Do you phone up the Student Loans Company and just remind them it’s stopped? Nope.

You have to phone the Student Loan Company to tell them to tell Her Majesty’s Revenue & Customs to tell your employer to stop the payments.

Ridiculous!

So how do you streamline this process?

It turns out the Student Loans Company only updates your balance once a year!

Firstly, find out the exact amount in your balance. You can do this by checking the last balance letter you were sent by the Student Loans Company, or by checking your online account. You’ll need your customer reference number and secret answers. If you’ve forgotten these (probably because you last used them ten years ago), you’ll need to phone up and reset them.

I would recommend you do this ASAP, as it turns out this balance figure is only updated once every 12 months – at the end of the financial year on March 31st. If it’s less than £1,000, there’s a chance you’ll have already paid your loan off, and more, this year. If this is the case, proceed to option two a few paragraphs below!

If you still have a chunk left, but it looks like you’ll pay it off in a year then you need to think ahead.

You’ll be sent a letter when your loan is nearly paid off so don’t ignore this like you do with all their other letters!

The Student Loans Company will actually send you a letter telling you when your loan is nearly paid off so don’t ignore this like you do with all their other letters! You now have the option to change your payment plan, so it no longer comes out your salary but is a direct debit.

You can either pay in one chunk, or set up monthly payments. This will give you control over the payments as it’s not direct through your salary any more so you can arrange payments to coincide with the actual amount and finish when the full amount has been paid off, without faffing about with refunds. You need to phone the Student Loan Company (numbers here) to set this up.

Option two: you’ve already overpaid or you will overpay before the end of the next financial year. The good news is you’re due a refund, the bad news is there is paperwork to get it back. So don’t start spending it yet! For some friends, this has been a very simple process, but we’ve all seen horror stories online where it’s taken months!

To start the process, you need to get all your payslips together since April so you can confirm the total amount you’ve overpaid. You will also need your customer number and personal details.

It will take about 20 days for your overpayment to be refunded.

Call the Student Loans Payment line on 0300 100 0611. They will run through the details with you and arrange for the refund. You’ll also need to give them your account details so they can pay it back to you.

Next, you need to post these payslips along with a cover letter summarising the amount and refund details, along with your customer number and contact details. Confirm your bank details are saved on your account. When this arrives with the Student Loans Company it will take 15 days to process, then another three days for the payment to arrive in your account. So 20 days in total to receive your refund payment.

They will also notify HMRC that you have paid the full amount and they are to stop taking the payments out your salary. This does, however, take up to 28 days, so in the meantime it’s very likely another repayment will have been taken out your account. Keep an eye on your payslip and you’ll need to send another left with the payslip to claim the final amount.

Then you’re done, free at last! As this is a personal finance blog, I will suggest you spend at least some of it responsibly and either add it to a savings account or your pension.

Photo by Zachary Nelson on Unsplash