Student loan debt plaguing Netherlands as grant system disappears
Graduating without debt is becoming increasingly difficult for students now that the basic study grant is being abolished. This has left parents with the question of whether they give their kids extra financial help, or let the study loan debts run up. Many parents can not afford the extra financial help.
This is according to the National Institution for Budget Information, Nibud, on Monday. The basic study grant will be abolished in September, at the start of the new academic year.
Nibud research showed that 58 percent of students plan to borrow more money now that the basic grant is no longer available. 53 percent indicated that they will work more hours and 34 percent said that they will have to dip into their savings. Slightly more than a third of the students indicated that they will continue living at home, even though they would have preferred living in student accommodations.
In June of this year almost 595 thousand former students had a study loan they need to pay off. More than one in five - 122 thousand - are in arrears, an increase of 30 percent compared to 2012. This is according to figures from DUO, the education executive agency, NOS reports. Almost 76 thousand students were confronted by a collection bailiff. And about 32 thousand students could not be found, resulting in about 88 million euros that can not be collected.
The Ministry of Education intends to monitor student loans more closely, especially now that the loans are likely to increase due to the abolishment of the basic grant. "This certainly concerns us and so we have already improved the information provision", Minister Jet Bussemaker said, according to NOS. "We have made the repayment options more flexible and we will find those who really do not want to pay and tackle them more strictly."
Nibud is encouraging parents to sit down with their children and draw up a budget, to determine exactly what the shortfall is. This way parents can see if they will be able to cover the shortfall themselves, or the student can take out a higher loan that covers the costs.