Student loans and freelancing

Last Updated on 4 March 2022

NB: This blog mainly uses 2021-22 figures for Plan 2 loans. Figures change every tax year, and might be different for Scottish residents, but the principle is the same.

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Student loan repayments are a bit of a pain when you’re a PAYE freelancer.


You’re supposed to start paying down your student loan when you reach an annual income of £27,295. That’s the figure politicians bandy about.

BUT, employers paying you through the payroll use the weekly income as a trigger to start paying a loan down. The current trigger for plan 2 loans is £524 a week or £2,274 a month.

For PAYE freelancers just starting their career this brings a manifest unfairness, as they might earn more than £524 for a few weeks, and then nothing for a few months. I’ve met people who earn less than £20,000 in a year and have had part of their student loan paid off.

This is definitely not how the student loan system was sold to the nation.

Getting a refund

It is possible to get a refund if you’ve overpaid, though many PAYE freelancers are unaware of this, possibly because they’re not paying attention to their payslips.

This won’t be relevant to sole traders, as they declare total profit at the end of the year in a self-assessment tax return. However it might be very relevant if you have a mix of PAYE and sole trader income. gives four reasons you might get a refund:

  • 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

You’ll also find details of how to contact the Student Loan Company to get a refund:

How user friendly is the system?

I’m very grateful to a former participant on one of my Finance for Freelancers courses who let me know how the refund system worked for them. In short “painless but lengthy”.

This freelancer has a mixture of PAYE income and sole trader income. Here’s what they wrote:

I contacted Student Loans in May [2021] by phone to raise the query that I might be due a repayment for the 2020/21 Tax Year. I received a letter in the post from Student Loans stating that they don’t receive information for self employed persons from HMRC until January the following year and advised I get back in touch in February 2022.


I just got off the phone with them today [24 Feb 2022]. Apparently they don’t actually receive the info from HMRC until the end of March, but the advisor on the phone filled in a form to send to HMRC to get the updated information for the 2020/21 Tax Year. This process should be completed within 20 days.

While on the phone, he notified me I was also due a refund for the tax years 2016/17 and 2015/16. This repayment was processed and should be in my account in 4 to 6 days.

How to keep on top of things


The way to spot if you’ve overpaid on a student loan is to keep an eye on the annual threshold, and then check if you went through the weekly/monthly threshold for any PAYE work you’ve done.

My top tip is to download my free PAYE payslip record sheet and fill in the deductions whenever you get a payslip. That way you will have a running record of what people have taken off your payments for the whole year.

This will be useful if you have to contact the Student Loan Company or HMRC.

Also, as a matter of course:

  • keep your payslips
  • keep any P60 you might receive

I’d be interested if you have any experiences of getting refunds for overpayments yourself. Comments are always welcome below.

Good luck!

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Posted on 03 March 2022

  1. Dale Platt said:

    Hi David, I was fortunate enough to get some fantastic advice from you during sessions I had during my time on the ScreenSkills Trainee Finder back in 20/21.

    I am currently having an enormous amount of difficulty dealing with SLC. I have been told that as my gross earnings are over the annual threshold for both tax years 21-22 and 22-23, I am not entitled to any overpayment refund. However, I can see from my payslips that I have overpaid. For instance, I took Oct-Dec 2022 off from work and effectively made myself unemployed – despite this, SLC are using the weekly and monthly thresholds to calculate my repayments and only using the annual threshold as an arbitrary figure to dictate whether I am eligible for a refund or not.

    In the current tax year (23-24) I have earned around £16,500 gross while paying around £650 on my Plan 1 and £460 on my Postgrad plan. In effect, I have been told that if I am £1 under the relevant thresholds (£22,015 and £21,000) then I am eligible for an overpayment refund but if I go £1 over those thresholds then I am not eligible for a refund on repayments for either plan.

    I am currently at a loss as to whether I can do anything at this point despite effectively paying above and beyond the 9% and 6% above threshold repayments that I agreed to im the first instance of the loans.

    Surely common sense should prevail?

    • David said:

      Hi Dale

      I’m afraid there isn’t a lot of common sense about the student loan repayment system with temporary and ‘freelance’ work patterns. It hits PAYE people particularly hard because of the way the employers are supposed to make the deductions.

      This has the result that people who are just over the threshold are paying a lot. I wish I had a solution for you. But I think you have come up against a system that is inherently unfair. There are rumblings that some of this might change if there’s a change of government. Let’s see.

      • Dale Platt said:

        Very good to know – I really do appreciate your reply. It’ll just have to do in the meantime! That being said, now I have used up my personal tax allowance, I am making every effort to invoice wherever possible and go self employed! Again, huge thanks!!

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