Graduates' student loan troubles rising
Due to a lack of well-paying jobs, a growing number of graduates are having difficulty paying off their student loans. According to a report from Dutch Education Executive Agency (Dienst Uitvoering Onderwijs, DUO), there were more than 93,000 students who were not able to settle the debt last year, an increase of 76 percent over five years, De Volkskrant reports.
The report from DUO, the agency that handles student financing, reveals that almost 37,000 graduate students were so under-paid that they could not repay their debts at all. Only 56,000 were able to pay, but with a lower interest than previously arranged.
Students who have applied for a student loan start paying back two years after completing their study, unless they don't have a job or make too little money. The remaining debt is cleared if it has not been paid back after 15 years, and is taken from the treasury, as the Dutch government guarantees the loans. This happened with 15,000 people in 2013.
Student loans will become even more burdensome in September when the new social loan system kicks in. According to Tom Hoven, president of the National Student Union (LSVb), everyone is convinced that student loans will only grow with the new scheme.
In total, Dutch graduates owe €8 billion. "We are very shocked by these figures", Hoven says. The average debt among graduates is currently €15,000. The Netherlands Bureau for Economic Policy Analysis (CPB) estimates that this debt will rise by another €6,000 to €9,000 as a result of the new scheme.
The Cabinet justifies the new regulation by saying that €1 billion will be saved in combination with the scrapping of the public transport OV-cards for students.
Professor at TU Delft, Jacco Hoekstra, warns that the "enormous bubble of study debts" could become irrecoverable if graduates are simply unable to pay back their loans. Just like the mortgage debts were responsible for the current crisis, unpayable student debts could come back to bite the government in the rear. Hoekstra's calculations remind him of the current situation in the United States of America.
American students pay their entire study themselves, De Volkskrant writes. Around 37 million American graduates are now living with a student debt over their heads, a black cloud worth €1000 billion dollars (€745 billion). Of American students, 15 percent has a difficult time paying off their loans.
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