Dutch gov't wants to increase interest on student loans

800px-A_photo_of_students_walking_over_the_bridge_on_the_campus_Roeterseiland,_Amsterdam;_high_resolution_image_by_FotoDutch_in_June_2013
. Picture: Wikimedia Commons/Fons Heijnsbroek

The Dutch government wants to increase the interest on student loans as of 2020, according to a legislative proposal sent to the Tweede Kamer, the lower house of Dutch parliament, last week. The measure must bring 226 million euros into the treasury, and is intended to keep the loan system affordable, ANP reports.

The measure will apply to students who start studying from 2020 onwards. From then on, the interest on student loans will be linked to the interest paid by the government on government loans with a 10 year term. Now that interest is linked to government loans with a 5 year term. Interest on 10 year terms is higher due to the longer term.

Over the past decade, the 10 year interest rate was 0.78 percent higher than the 5 year rate. That will amount to 18 percent higher monthly costs for students with a full bearing capacity, according to the news wire. With an average student debt of 21,000 euros, the amount the student pays monthly in repayment and interest is currently 70 euros. That will increase to 82 euros after this measure is implemented.

National student union LSVb calls this measure unacceptable and demands that it be scrapped. "This amounts to thousands of euros, while at the time of the abolition of the basic study grant social loan conditions were promised", the union said to the news wire. "In this way students lose confidence in politicians. They build up more debts through the abolition of the basic study grand and now also through the raising of the interest on that debt."

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