Students borrowing extra for future mortgages, luxury goods

One in three college and university students borrow money from DUO - the Office of Education. 33 percent of these students borrow this money to build up a savings account for when they are done with their studies or some to purchase their own home.

This is according to the Nibud Student Study 2015, conducted by NIbud with the cooperation of the Ministry of Education, ING and Studenten.net.

According to the study, 93 percent of students receive study financing. More than 1 in 3 students have an interest-bearing loan from DUO and borrow an average of 484 euros per month. The students indicated that the main reasons for borrowing money are the favorable lending conditions DUO offers (63 percent), because their parents recommended it (58 percent), because they do not want to burden their parents (57 percent) and to buy luxury goods (15 percent).

Nibud understands that the current low interest rate could motivate students to borrow money and put it in a savings account, but warns that this also has some risks involved. Students should keep in mind that a student loan is a long-term financial commitment, especially those students who pay off their student loans over 35 years. A lot can change during that time, increase rates could change and graduates' incomes would make the repayment amounts higher and higher. Students should also take into account that the amount of a student loan will affect the amount the student can qualify for in a mortgage loan after graduating. The higher the debt, the lower the maximum mortgage.

Nibud expects that students will borrow more now that the basic study grant has been abolished. Students are strongly advised to not borrow more than is necessary for their monthly expenses. 32 percent of students indicated that they could borrow less and still get by.