Student loan interest rate set to rise, affecting 140,000 in the Netherlands
The interest rate on student loans will increase from next year, the Ministry of Education, Culture, and Science said on Tuesday. About 140,000 students will pay more on their loans, a spokesperson for the Ministry said to RTL Nieuws.
Student loans have a fixed interest period of five years. The interest rate increase will therefore affect students who started repaying their loans in 2018, 2013, 2008, or earlier.
The student loan interest rate has been 0 percent since 2016. Next year, it will increase to 0.46 percent.
Students who completed their studies before the introduction of the loan system in 2015 and therefore repay according to the rules of the old system will pay 1.78 percent, according to RTL. The same applies to MBO students, whether they studied before or after 2015. Minister Robbert Dijkgraaf of Education wants to equalize this when the basic grant returns in the 2023/24 academic year.
The student loan system means that former students enter the labor market with much larger debts. Different repayment rules apply to students who fall under the loan system. They have 35 years to repay their loans, after which the remaining debt is forgiven. Their total debt also counts less heavily when applying for a mortgage.
Students who completed their studies before 2015 and received their grant as a gift upon graduation must repay their loans within 15 years.
Minister Dijkgraaf said he could imagine that students and former students are worried about the rise of interest rates. “Especially at a time when many things are becoming more expensive.” He stressed that the Education Executive Agency (DUO), responsible for student loans, will “take your personal situation into account.”
The interest rate hike will give students and former students "even more financial headaches," Terri van der Velden, chairman of the student association ISO, said to ANP. He called for an interest rate ceiling on student loans. According to Van der Velden, the increase won't lead to immediate serious financial problems. But "we do see an ominous scenario in which the interest rate will skyrocket in the coming years."
