Student loan repayment query

qzmpwoks

Hi,

hoping this is the right place!!

I have recently contacted student finance about any possible refunds due to over payments I have made.

Both my plan 1 and plan 2 have been paid in full since October 22 and October 23.

From reviewing my accounts and repayments they have found in the tax year 13/14 my income was below threshold when repayments had been made, there is no overpayment but due to the payments being taken when my income was below repayment threshold I am due a £255.00 refund.

However, they have said from processing the refund, the refund will cause my balance to increase (eventhough both my accounts have been paid in full) by the amount refunded and i will then owe this back to them.  HMRC would then notify my employer to start deductions from my salary.   

Is this right? 

I really do not understand and would appreciate anyone that is able to explain it so I can understand if it is correct?

or what to do if what they are advising is wrong?

Thank you in advance  

MSE_ForumTeam5

We've moved this across to a more appropriate board.

silvercar

It does make sense.

You made repayments in 2013/14 from months when you were earning over the monthly threshold, but you weren’t over the annual threshold, so therefore are entitled to have this money returned to you. This normally happens either because you weren’t earning for the whole tax year or because you had a bonus/ back dated pay rise/ other income in some months but nor for the entire year. So they are offering to pay you back.

Now wind forward to today. Your previously cleared student loans have £255 outstanding. This is the money they took from you that you are entitled to have returned (see previous paragraph). This is an outstanding loan amount, so you will need to start making repayments of 9% of earnings above the lower threshold. This will continue until that £255 plus any interest is paid back. If your current earnings put you in a position where you will finish repaying the £255 within 2 years, you can choose to pay by direct debit instead of through your employer. Either way if you are currently earning even a small amount above the threshold you will eventually be paying the £255 back, so it probably isn’t worth the hassle of taking the refund and then starting repayments.

if you won’t be earning over the threshold between now and when the loans are cleared it may be worth claiming the £255.