Student loans - repaying back too much.

Jenbug

In the last financial year I earnt £18,847.97 thus taking me over the threshold of £17450 to pay back my student loan.
I would have been due to pay back £122 on the amount I earnt this year but due to having 2 months where I did a lot of overtime I have ended up paying £329 but the student loans company are saying they are entitled to keep the overpayment as I went over the threshold to start paying back my loan.
Is this right? I can't find anything in my original agreement about it and it's frustrating as it means I suffer as some months I may only recieve £900 before tax from work but then if I can get overtime I can earn £1800 before tax so I feel if I am being penalised for not having a stable income month on month as if I did I would have only paid £122 over the year rather than £329!

Any advice??

daisy23169

I'm not 100% certain on this so I will double check tomorrow at work, but I believe that SLC will only refund overpaid deductions if you didn't meet the repayment threshold during the year (or if you've paid off the balance of your loan).

Once your annual earnings go over the threshold then the deductions which have been made stand, even if they're higher than they would be if you calculated the amount due based on annual earnings rather than based on individual months.

I can see why you're annoyed, it's an imperfect system.

Jenbug

Yes it almost puts me off doing any extra overtime in work as after tax and student finance I come out no better off sadly.

BrassicWoman

Jenbug wrote: »

Yes it almost puts me off doing any extra overtime in work as after tax and student finance I come out no better off sadly.

You have less debt, so you are better off

Jenbug

Not really as I will be paying off my student loans for my entire working life but as with any debt it Should be worked out in relation to what you are earning. To loose an extra £200 due to just working a little more hours a month in order to try and pay off other debts when I am not due to pay that much to the student loans company no I am not better off for having paid them more money.

Ed-1

BrassicWoman wrote: »

You have less debt, so you are better off

The Government's better off as they're the ones that will end up writing it off. As it's an income contingent loan (i.e. a capped time-limited tax) of 9% of earnings above a threshold the less you pay now the less you pay in total regardless of whether the 'debt' appears lower. In fact on the pre-2012 loans as the interest rate is below inflation, even if you earn enough to repay in full you're still better off delaying repayments.

Ed-1

Jenbug wrote: »

In the last financial year I earnt £18,847.97 thus taking me over the threshold of £17450 to pay back my student loan.
I would have been due to pay back £122 on the amount I earnt this year but due to having 2 months where I did a lot of overtime I have ended up paying £329 but the student loans company are saying they are entitled to keep the overpayment as I went over the threshold to start paying back my loan.
Is this right? I can't find anything in my original agreement about it and it's frustrating as it means I suffer as some months I may only recieve £900 before tax from work but then if I can get overtime I can earn £1800 before tax so I feel if I am being penalised for not having a stable income month on month as if I did I would have only paid £122 over the year rather than £329!

Any advice??

You haven't overpaid.

Your repayment obligations are to pay 9% of your earnings over the pay period threshold. If you are paid monthly this threshold is the annual threshold divided by 12.

Mogley

Jenbug wrote: »

Any advice??

The SLC deductions are correct as others have eluded to. My advice would be to take advantage of any salary sacrifice schemes available through your employer. Child care vouchers, pension salary sacrifice etc. reduce your taxable income but also the income threshold for student loan in the pay period. The savings for you would be some tax, NI and student loan deductions.

njc2808

So, I've had a similar issue with this:

For the last two years (2015/16 and 2016/17) I've worked about six months of the year, and spent a fair amount of time volunteering or long distance cycling. As I get paid PAYE (and my monthly income has been higher than the monthly threshold), they have deducted the 'correct' amount from my monthly income. However, with only working for part of the year, my annual income is much lower than what HMRC are calculating for:

In 2016/17: I earned less than the annual threshold (£17 495), and was entitled to a full refund of ~£700 repayments I made (great!)
However...
In 2015/16: I earned approximately £90 over the annual threshold (£17 335) but made £1090 repayments to my student loan - of which I am entitled to no refund whatsoever - this works out at paying over 1200% of earnings above the annual threshold instead of 9%!

I think what bugs me is that if I was self-employed and earned the same amount over the year I would have only paid about £9. I have spent a couple of hours on the phone to the SLC to try and get them to see how ridiculous it is that if I had earned £90 less during the year, then I would have been about £1000 better off (I understand that I am in "less debt" as a result, but I may never pay off the full loan and therefore I'd prefer to keep the money for now).

I'm wondering if there are any avenues still open for me to pursue?

Sncjw

It’s only 27 quid a month you have lost this year that’s cheap for a loan. If your doing overtime to earn 1800 a month then £27 is not a lot.

adamh87

daisy23169 wrote: »

I can see why you're annoyed, it's an imperfect system.

That's putting it mildly.

Did you know that while the loan interest (regardless of how low it is) accumulates daily, and if you pay by PAYE there is a LONG delay between the time HMRC takes the money and the time it takes to be paid against the loan? The money is then paid to SLC in a lump sum with 0% interest accumulated despite the fact the government already has the money.

Ed-1 wrote: »

In fact on the pre-2012 loans as the interest rate is below inflation, even if you earn enough to repay in full you're still better off delaying repayments.

True, but it's still depressing to have debits taken from your salary and paid to a government that doesn't want the money back (based on how the loan is priced) and also pays no attention to whom it lends money

Mogley wrote: »

My advice would be to take advantage of any salary sacrifice schemes available through your employer. Child care vouchers, pension salary sacrifice etc. reduce your taxable income but also the income threshold for student loan in the pay period. The savings for you would be some tax, NI and student loan deductions.

^This is the best way to deal with it. Salary sacrifice anything you're offered (pension is the best example as above, but even extra holiday days are a better use of the money).