Paying back under the threshold

xxloaisisxx

Hi guys, hoping someone can help me with this;
I received a lump sum payment in my wages this month as compensation for loss of earnings from my job, it was subject to tax. As well as my tax and NI contribution there was also a payment that went to student loans. By the end of this tax year I will have made less than the threshold needed before being subject to repayments, am I able to claim this back?

agrinnall

This is in the FAQs for Plan 2 loans, I suspect it's similar for Plan 1.

I earned less than £21,000 in the tax year but had student loan repayments taken, can I get a refund?

Yes, you can apply to us for a refund of any repayments you have made in a tax year where you have earned less than £21,000. However, we will not make a refund unless you ask for one.

You may decide you do not want a refund, in which case you will pay off your loan more quickly and pay less interest on the outstanding balance.

Please note that we can only process a refund at the end of a tax year either once we've received confirmation of your PAYE income and student loan deductions from HM Revenue & Customs or where you supply us with a P60 showing this information.


http://www.studentloanrepayment.co.uk/portal/page?_pageid=93,6678775&_dad=portal&_schema=PORTAL

The_Jakal

Worth noting that you should definitely claim this money back too. Don't believe their drivel about paying less interest.

It's likely you won't pay off the full loan before 30 years is up so the extra interest in that case will be redundant.

Lokolo

The_Jakal wrote: »

Worth noting that you should definitely claim this money back too. Don't believe their drivel about paying less interest.

It's likely you won't pay off the full loan before 30 years is up so the extra interest in that case will be redundant.

You would pay less interest because you've paid more capital off. You pay interest on the balance, a lower balance means less interest.

As to "it's likely you won't pay off the full loan". I am 28, after leaving university at 23 and am 4 months to paying off my loans of £24k, and only overpaying the last 8 months (by £100 a month).

agrinnall

Lokolo wrote: »

You would pay less interest because you've paid more capital off. You pay interest on the balance, a lower balance means less interest.

As to "it's likely you won't pay off the full loan". I am 28, after leaving university at 23 and am 4 months to paying off my loans of £24k, and only overpaying the last 8 months (by £100 a month).

Well good for you, you must have gone into a very well paying job, but obviously the OP hasn't and would probably like the money back now rather than worry about perhaps paying a bit less interest in the future.

silvercar

Lokolo wrote: »

You would pay less interest because you've paid more capital off. You pay interest on the balance, a lower balance means less interest.

As to "it's likely you won't pay off the full loan". I am 28, after leaving university at 23 and am 4 months to paying off my loans of £24k, and only overpaying the last 8 months (by £100 a month).

You only had tuition fees of £3k a year, rather than the current £9k. Not knocking that you have done well to pay back so quickly, but OP may have a loan twice the size of yours.

Lokolo

silvercar wrote: »

You only had tuition fees of £3k a year, rather than the current £9k. Not knocking that you have done well to pay back so quickly, but OP may have a loan twice the size of yours.

agrinnall wrote: »

Well good for you, you must have gone into a very well paying job, but obviously the OP hasn't and would probably like the money back now rather than worry about perhaps paying a bit less interest in the future.

Indeed I am lucky, but the person I was replying to was making assumptions which he shouldn't. To say "Don't pay anything into it because you most probably won't pay it back", was what I thought when I left university and started my job. It is a bit assumption that shouldn't be made.

I also didn't say don't get the refund, I was merely making the point that "Don't believe that paying some off will reduce the interest paid" is a load of bo**ocks. Of course it does, thats the whole point of a loan, you pay interest on the amount outstanding. Reduce that amount, reduce the interest.

The_Jakal

Lokolo wrote: »

Indeed I am lucky, but the person I was replying to was making assumptions which he shouldn't. To say "Don't pay anything into it because you most probably won't pay it back", was what I thought when I left university and started my job. It is a bit assumption that shouldn't be made.

I also didn't say don't get the refund, I was merely making the point that "Don't believe that paying some off will reduce the interest paid" is a load of bo**ocks. Of course it does, thats the whole point of a loan, you pay interest on the amount outstanding. Reduce that amount, reduce the interest.

Perhaps I was making assumptions. I wanted to keep it simple so as not to confuse the situation. What I meant to say was that "effectively" the majority of current graduates will never get anywhere near clearing any of the interest at all let alone the extra interest we're talking about. Therefore it's "effectively" not extra interest.

Even Mr Lewis himself says the same.

I agree that in the minority of cases it pays to pay it off early and it's definitely an extremely complex issue.