“Almost £20 billion is loaned out to around 1.5 million students in England.”

As per Bankrate Statistics,

“There is a proposal for suspending the student loan tax by Nov 1, 2022, in the UK. It implies if students are in federal loan default, the 2021 tax return does not add to the total balance. The students can leverage the benefit only if they file for the return by the deadline.”

UK government is exercising leniency in wiping off the trouble for students with its plans for extending the student loans payments for up to 10 years, as per independent.co.uk.

Given the scenario, students still overpay student loans.

The major reasons for these are high-interest rates on student loans, online payments, not keeping track of repayments, etc. 

The situation is becoming an avoidable issue for students in the UK. Paying more than one owes on a student loan affects the overall budget and desires.

The article discusses the ways to prevent overpaying on student loans. Let’s begin!

Fail-Proof Ways to Avoid Overpaying the Student Loans

The amount you repay monthly or weekly does not depend on the total amount you owe. The deductions may continue late until you pay back the complete amount. There are a few things that you should be mindful of; while paying student loan repayments.

1)   Calculate the Repayments the Right Way

The student loans are paid through PAYE, maintained by your employer. If you are self-employed, HMRC analyzes it.

You pay-

• 9% of the income in the Plan1,2 and 4 thresholds. It accounts for (£480 a week and £2083 a month).
• You pay 6% of the total earnings over the threshold for a postgraduate loan.
• If your income falls under the Plan 2 threshold (£524 a week or £2,274 a month), one makes repayment under Plan 4.

Interest starts when you get your first payment. Check out the government guidance on student loans repayments for a better understanding. Use student loan repayment calculator 2021 for calculating the total repayments to make.

2)   Choose the Right Repayment Method

Prefer either to pay off the complete loan amount all at once or set up monthly payments.  It will provide you with the flexibility to manage loan amounts sagaciously. You can exercise the flexibility of carefully arranging the payments and finish off the repayments quickly.

3)   Switch to Direct Debit

As you approach the end of your repayments, some crucial decisions are waiting from your end particularly about the loan. Switch to Direct Debit for making the remaining student loans payment. 

It is ideal to use Direct Debit within 23 months of paying off your complete student loans. You will soon receive a letter from SLC regarding the same. It will suggest you switch to Direct Debit to avoid overpaying the student loan. Paying from Direct Debit will prevent your employer from making you pay over what you owe.

Thus, check your account to see whether you are close to making the complete repayments on the student loans or not. It will help you use Direct Debit at the apt moment.

4)   Don’t Overuse the Credit Card

Credit Cards are the greatest evil when it comes to impulse spending. It is ideal to either set a limit or reduce the credit card used for paying off loans. Never skip a credit card dues to pay off your student loans. If such happens, use unsecured personal loans on bad credit purposefully. Also, refrain from exceeding the credit card limit if you do not require one.

5)   Dedicate a Separate Saving Account

When saving for student loans repayments, it is ideal to dedicate a separate account. It will help you keep a tab over repayments and avoid over-spending. Moreover, a savings account comes with further benefits. Leverage those to pay the loan early.

What If You Overpay Students’ Loans?

If you cannot keep the tab of the repayments and overpaid the due amount, you are up for a refund. The good news is- that you have paid for the loan, and the bad news is–the paperwork that follows. Student loans overpayment happens because of incorrect dates and setting up early repayments. According to the government guidelines, a student can claim a refund on the student loan if:

• A student pays more than the total amount on the loan
• The income is below the threshold
• Making repayments before the due date
• Overpaying the loan because of the wrong repayment plan your employer put you through

If you can relate to any of these, it is ideal to contact SLC- Student Loans Company for further help.

Can One Be Denied a Student Loan Overpayment Claim?

Remember, you cannot claim a student loan refund if:

• You never paid your repayments
• You still have repayments on the loan
• You took a loan before 1998

      If you were on student finance claiming overpayment relief, student finance lasts for about 60 days icase of health issues. After that, continued payments would not be considered overpayments.

The recovery of loans and grant overpayments from student finance in England (SFE) is made by reducing the loan and grant in the same or the upcoming academic year.

How To Get a Refund From SLC?

To get the refund from the SLC, connect them through a call, message or by sending an email stating your grievances. The organization has different rules for student loan over-repayment claims in different regions in the UK- England, Wales, and Scotland. Before making a claim, go through the guidelines mentioned on the website according to the region you belong to.

The organization will conduct certain checks and tally your repayments over time. You have to provide relevant details for the smooth processing of the claim. You can expect the payment within 20 days of the application in your account. Provide all your pay slips along with a cover letter summarizing the amount, refund details, customer number and contact details.

If you qualify for a claim, the SLC will inform you about your status to HMRC as well. They will stop sending emails to make the payments anymore. This procedure is time-taking and may take another 28 days. You will have to send the payment slip again to claim the total amount effortlessly.

So, these are some tips to prevent overpaying on your student loans. If you overpay, you can check the same with SLC and get a refund.