MARTIN Lewis has urged savers to act now to boost their balances ahead of a key decision tomorrow.
He spoke during Tuesday’s episode of his ITV programme, The Martin Lewis Money Show Live.
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Martin urged Brits to check what interest they currently get ahead of an expected fall in the UK base rate this Thursday.
He said: “The UK base rate, this is the Bank of England set rate, obviously was very low and then it’s risen recently and peaked at 5.25%.
“It’s dropped to five per cent now and we are expecting on Thursday that interest rate to drop by about a quarter of a per cent.”
He qualified that this was not guaranteed.
Martin went on: “Now though we are in the position where inflation is substantially lower than we have on interest rates so your money is growing in real terms.
“If you put money away in savings and in a couple of years, you will be able to buy more with it than you could at the point you put it in.
“Saving is finally, at last, paying.”
In the same programme, he also warned that a million people have been overpaying their student loans – and could be owed a refund.
In the last tax year, more than one million university leavers overpaid their student loans, according to figures released by the Student Loans Company (SLC).
Speaking on The Martin Lewis Money Show Live, on ITV on Tuesday, the show host said graduates were able to claim money back if they had overpaid, which was “very easy to do”.
There were four main reasons you may have overpaid your student loan.
Martin said: “The first, and the biggest by a mile, over a million people overpaid this way, is you should only repay if you earn over the annual threshold.”
He added: “For Plan 2, which has the most number of people on it, 2012 to 2022 English starters, you’ve got to understand, if you earn less than that [£27,295] you shouldn’t repay the student loan but because it’s taken via the payroll your student loan is taken monthly.
“A twelfth of that is £2,274 per year, so if you earn more than that in a month, you’re gonna have student loan contributions taken from you.”
He explained that because repayments are taken from your payroll monthly, if your earnings vary through the year, you may be assumed to be over the yearly limit in one month of decent earnings.
This is despite you not earning above the total threshold for the year when earnings are taken as a whole – meaning the money is taken from you despite not being eligible.
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A second reason was people were on the wrong student loan repayment plan – in which case you should talk to your employer and tell them what plan you’re on.
The third reason is that you started repaying too early.
If you started university from 1998 onwards and were a full-time student, you should not have begun paying your loan back until the April after finishing your course.
But the latest figures from SLC reveals that 59,251 students had loan repayments taken before they were due to start repayments in 2023/24, according to MoneySavingExpert.com.
The fourth reason is that the loan was wiped – which typically happens after 30 years – but a number were still left paying in error.
A number of case studies of those who overpaid were revealed in an article for Martin’s Money Saving Expert website, published on November 4.
How have student loan repayments changed?
STUDENT loan repayments are based on your earnings and not the size of the debt.
However, when you start making repayments or when your student loan amount is written off will depend on when you went to University.
Plan 1 – 1998-2012
If you took out a student loan between 1998 and 2012, you’ll be bound by the Plan 1 repayment rules.
These students only start repaying their loans when their salary breaches the threshold of £24,990 a year.
You’ll pay 9 per cent back once your salary breaches this threshold.
The interest rate charged on these loans is based on either RPI or the Bank of England rate – whichever is lower – plus one percentage point.
These loans are written off after 25 years.
Plan 2 – 2012-2023
If you took out a student loan between 1998 and 2012, you’ll be bound by the Plan 2 repayment rules.
These students only start repaying their loans when their salary breaches the threshold of £27,295 a year.
You’ll pay 9 per cent back once your salary breaches this threshold.
The interest rate charged on these loans is based on RPI plus up to three percentage points – dependant on your income.
These loans are written off after 30 years.
Plan 5 – 2023-present
If you took out a student loan from 2023 onwards, you’ll be bound by the Plan 5 repayment rules.
These students only start repaying their loans when their salary breaches the threshold of £25,000 a year.
You’ll pay 9 per cent back once your salary breaches this threshold.
The interest rate charged on these loans is based on RPI only.
These loans are written off after 40 years.
Fiona wrote in during October 2023 saying: “I knew something wasn’t right when I lodged my tax returns and reading Martin’s article was the catalyst for a sustained attempt to work out what had happened. I received £3,773 back.”
Lyndsey said: “Thanks to watching Martin Lewis’s programme last night I contacted the SLC and have got a refund of £706 as I had started paying straightaway. Great just before Christmas.”
Melissa said: “Just wanted to say a massive thank you as I read your article on overpaying on student loan repayments and realised there was a chance I had overpaid.
“Turns out I had and I’ve since received a refund of £900! I’ve been doing house renovations this year so this money has been incredibly handy in going towards them.”
Read more on the Scottish Sun
Lisa added: “I spent 15 minutes on the phone and got £555 back for overpayments on my student loan.
“Most was because of my maternity leave. Thanks so much, couldn’t have come at a better time.”
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