Students worried about effect of interest rate hikes on study loans
Students are increasingly worried about an increase in the interest rate on their study loans, according to the students' organization ISO. Chairman Lisanne de Roos called the rising interest rates yet another financial blow to students.
The interest is set each year for five years for the group of students graduating that year, the ISO said. "The interest rate is determined based on the average effective return on a five-year Dutch government bond in the previous academic year. In recent years, the interest rate was negative, which meant that students paid 0 percent interest on their study debt."
But the current economic situation and rising inflation could push the interest on student debt over 1.5 percent in the coming years, according to ISO. "After the empty promise about not counting student debt for a mortgage application and the meager compensation for the loan system generation, it now appears that students may have to pay hundreds of euros per year in interest. By the time students have paid off their entire student debt, that will be thousands of euros. That is seriously a lot of money, accompanied by many worries," said De Roos.
ISO also pointed out other things costing students more money, such as increased rent and energy prices, higher grocery costs, and the expected increase in tuition fees for the 2023-2024 academic year due to inflation. "The increasing amounts lead to financial concerns among students," said De Roos.
A spokesperson for Minister Robbert Dijkgraaf of Education, Culture, and Science said that he understands students' concerns about the rising costs. However, it is important to realize that the recent period of historically low interest rates was truly unique, the spokesperson said. "In addition, special social repayment conditions still apply to student debts. Those who earn little pay nothing, and above that, what you repay remains dependent on your income. And if the interest rate goes up at the end of this year, nothing will change for many people paying off their student debt in the short term. The interest on student debts in that repayment phase is always fixed for a period of five years. After the study, the percentage of that moment remains fixed for five years."
Reporting by ANP