Martin Lewis has highlighted a key issue for millions of workers who have just had a pay rise due to the increase in the minimum wage.

Those with student loans may now be tipped into the repayment threshold if they work full time.

In a tweet, he raised the issue of the plan 5 student loan repayment threshold, which starts at £25,000 a year.

He said: "A full time worker doing 40hrs a week on the new increased £12.21/hr minimum wage would earn just over £25,000. The Plan 5 student loan repayment threshold (ie English students who started uni since 2023) is £25,000 and is frozen until 2027.

"So in the April after those graduates leave uni, even on min wage jobs, they'll now often need to start repaying (a little) bit of their student loans."

He added in a follow up: "Many people saying 'it's the interest rates that are the killer' actually that's not true.  These new Plan 5 loans interest is set at the rate of inflation, that seems good but it distracted from the killer changes to this cohort of students.

"The repayment threshold was lowered to £25,000 so people start repaying on lower incomes. Repayments last 40 years not 30 years.   

"For many this effectively increased what they'd likely repay by very roughly around 50% (barring very high earners who'd repay less due to lower interest and the fact they'd have cleared early anyway). It was a huge stealth rise that many missed, as it's tough to explain and people focus on tuition fees (the recent rise in which had trivial impact compared to these changes)."

Watch on TikTok

When do graduates have to start repaying their student loans?

This varies, but graduates only repay when their income is over the threshold amount for their particular repayment plan, unless they’ve been overpaid.

Their income is the amount they earn (including things like bonuses and overtime) before tax and other deductions.

The threshold amounts change on April 6 every year.

The earliest they start repaying is:

  • the April after they leave their course
  • the April 4 years after the course started if they’re studying part-time and the course is longer than 4 years
  • April 2026 if they’re on Plan 5

Repayments automatically stop if either:

  • they stop working
  • their income goes below the threshold

What are the different plans for Student Loans, and the thresholds?

Plan 1 student loan

The threshold is over £501 a week, £2,172 a month or £26,065 a year.

Plan 2 student loan

The threshold is over £547 a week, £2,372 a month or £28,470 a year.

Plan 4 student loan

The threshold is over £629 a week, £2,728 a month or £32,745 a year.

Plan 5 student loan

The threshold is over £480 a week, £2,083 a month or £25,000 a year.

Postgraduate Loan repayment plan

For a Master’s Loan or a Doctoral Loan, the threshold is over £403 a week, £1,750 a month or £21,000 a year.

Repaying an overpayment

The Student Loans Company (SLC) will write to anyone who has been paid more student loan or grant than they’re entitled to.

They must repay this separately from the rest of their student loan.

What if I've overpaid my Student Loan Repayments? Can I get a refund?

Very much yes. And many people have. 

You can ask for a refund if:

  • you’ve paid more than the total amount you owe
  • your annual income was below the threshold
  • you started making repayments before you needed to
  • you’ve repaid more than you need to because your employer had you on the wrong repayment plan

If you pay back more than you owe

HM Revenue and Customs (HMRC) will tell your employer to stop taking repayments from your salary when you have repaid your loan in full. It can take around 4 weeks for salary deductions to stop.

This means you may pay back more than you owe.

You can avoid paying more than you owe by changing your payments to Direct Debit in the final year of your repayments. 

Recommended reading:

If you have paid too much the Student Loans Company (SLC) will try to:

  • contact you to tell you how to get a refund
  • refund you automatically (this will appear in your bank account as ‘SLC Receipts’)

If you’ve overpaid and have not heard from SLC you can ask them for a refund.