£97.6 million went back to 416,400 people. Some of it may be yours
What happened
On 29 October 2026, the Student Loans Company announced that its Digital Refund Service has passed 1.6 million refund requests since it launched in 2024. The service lets people claim back student loan repayments they should not have made, through their online account, without ringing anyone. The figures for one type of refund give a sense of the scale. In the 2025/26 tax year, £97.6 million was refunded to 416,400 customers under what the SLC calls the 'Below Threshold' scenario, paid straight into their bank accounts. Below Threshold means this: student loan repayments are taken from your pay only when you earn above a set amount. But they are calculated on each pay packet, not on your year as a whole. So if you had a few good months and then a quiet period, or worked overtime in December and not in March, deductions can be taken from individual months even though your total earnings for the year ended up below the annual threshold. That money is refundable. There are three other situations where a refund is due. A credit balance, where repayments carried on after the loan was already cleared, usually because of payroll timing. Early repayment, where deductions started before your Statutory Repayment Date, often through an employer error. And incorrect plan type, where an employer put you on the wrong repayment plan. Jackie Currie, SLC Director of Customer, said: 'At SLC, we're committed to delivering a modern, simple and digital experience that works for customers.'
Why this matters
Most people assume student loan deductions are correct because they appear automatically on a payslip and nobody chose them. They are usually correct. But 416,400 people in a single year, for one refund type alone, is not a rounding error. The group most affected is people whose income is uneven. That means anyone on variable hours, anyone who does seasonal or shift work, anyone who had a gap between jobs, anyone who went part-time, and anyone who took parental leave partway through a tax year. In other words, a lot of people working in retail, hospitality, care and the NHS. It also catches people early in their careers. Deductions sometimes start before your Statutory Repayment Date, which is the date from which you are actually due to start repaying. If an employer starts deductions too early, that money is yours. And the wrong plan type is more common than you would hope. Plan 1, Plan 2, Plan 4, Plan 5 and postgraduate loans all have different thresholds and rates. An employer that guesses wrong can take too much for years. None of this is a scandal. It is mostly the predictable result of calculating an annual threshold on a monthly basis. But it does mean the money sits with the SLC until someone asks for it back.
What the evidence actually says
A few points of accuracy, because this topic attracts a lot of misleading content online. First, a refund is not free money and it is not compensation. Repayments you get back are added back onto your student loan balance. You have the cash now instead of having paid down the loan. Whether that is a good deal depends entirely on your circumstances. For many people on Plan 2 or Plan 5, who will never repay the loan in full before it is written off, taking the refund is clearly sensible. For someone who is close to clearing their loan, adding to the balance may mean paying more interest overall. There is no universal right answer, which is exactly why the SLC says it provides guidance but cannot give financial advice. Second, you do not always have to chase it. The SLC contacts customers eligible for a Below Threshold refund at the end of each financial year and invites them to request it, but only after it receives annual earnings data from HMRC. That is why the contact comes months after the tax year ends rather than immediately. For credit balances, where you overpaid after clearing the loan, the SLC says it refunds automatically if it holds your current bank details. That last part is the catch. If your bank details are out of date, nothing arrives. Third, the trend. The service passed 1.1 million requests in October 2025 and 1.6 million in October 2026, so use is growing quickly. Fourth, on the incorrect plan type problem, there is a fix most people do not know about. You can download an Active Plan Type letter from your online account and give it to your employer, which stops the error repeating. Alongside the announcement, the SLC published an ad hoc statistical release, 'Student loan repayments via PAYE eligible for refund', covering all four scenarios across recent tax years.
Practical advice
Log into your student loan online account. That is the whole first step, and most people have not done it in years. While you are there, check three things: that your bank details are current, that your contact details are current, and what plan type you are on. Check your payslip against that plan type. If your payslip shows a different plan from your account, download your Active Plan Type letter and send it to your payroll department. This is the single most valuable five minutes in this article for anyone it applies to. If your earnings last tax year were uneven and you think you may have paid below the annual threshold, look for the refund option in your account. The SLC publishes guidance and a step-by-step video. If you have already cleared your loan and repayments continued, that is a credit balance. Make sure the SLC has your bank details, because automatic refunds depend on it. Before you claim, think about whether you want the money back or would rather it stayed against your loan. If you are near the end of repaying, it is worth a moment's thought. If you are nowhere near, take the money. Finally, and importantly: the SLC will not text or email you a link asking for your bank details. Go to the official site yourself. Refund scams targeting graduates are common and they tend to spike whenever stories like this one appear.
What to know
The Student Loans Company's Digital Refund Service has passed 1.6 million requests since launching in 2024, up from 1.1 million a year earlier. In tax year 2025/26, £97.6 million was refunded to 416,400 customers under the Below Threshold scenario alone. Four situations trigger a refund: earning below the annual threshold despite monthly deductions, repayments continuing after the loan was cleared, repayments starting before your Statutory Repayment Date, and being put on the wrong plan type by an employer. Refunds are added back to your student loan balance. That makes them clearly worth taking for most people, but worth a moment's thought if you are close to clearing your loan. The practical actions: log into your account, check and update your bank details, confirm your plan type matches your payslip, and send your employer an Active Plan Type letter if it does not. The SLC does not send links asking for bank details. Go to the official site directly. Sources: GOV.UK (Student Loans Company), 'SLC's Digital Refund Service hits 1.6million refund requests', 29 October 2026, https://www.gov.uk/government/news/slcs-digital-refund-service-hits-16million-refund-requests ; GOV.UK (Student Loans Company), 'More than 1.1m customers have used SLC's Digital Refund Service', October 2025, https://www.gov.uk/government/news/more-than-11m-customers-have-used-slcs-digital-refund-service ; GOV.UK, 'Student loan repayments via PAYE eligible for refund - Tax year 2024/25', https://www.gov.uk/government/statistics/student-loan-repayments-via-paye-eligible-for-refund-tax-year-202425/student-loan-repayments-via-paye-eligible-for-refund-tax-year-202425-6-april-2024-5-april-2025 This article is for general information and is not financial advice. It does not replace advice from a doctor, pharmacist or other qualified healthcare professional on any health matter.
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