Parliament lowers interest on study debts for unlucky generation

The Tweede Kamer voted to reduce the interest on student loans for the “unlucky generation,” who didn’t receive the basic study grant but had to borrow for their studies. Various proposals to this end, including an amendment to the Tax Act for next year, received support. It is not yet known how much the interest rate will decrease. DUO recently announced a sharp increase from 0.46 to 2.56 percent.

A proposal by Pieter Omtzigt, GroenLinks-PvdA, Volt, and the ChristenUnie received majority support in the Tweede Kamer, the lower house of the Dutch parliament. These parties want a tax benefit for expats to be significantly reduced. The money generated by this cut should go toward reducing the interest on student loans for the unlucky generation. From 2029, the cut should generate approximately 200 million euros annually. The parties’ amendment requests that these millions go toward a lower interest rate on study debts, but it is not yet certain that this will actually happen.

Remarkably, the Kamer also adopted a motion to completely freeze the interest on student loans for the unlucky generation with the proceeds from the Omtzigt amendment as cover. But Omtzigt said that it remains to be seen whether this adjustment to the budget will yield enough to freeze interest rates. A motion carries less weight than an amendment: it's a request to the government, which can ignore it. An amendment is a change to the law: the government must adhere to it.

An amendment by the SP and D66 to set the interest rate for the unlucky generation at 0 percent did not receive enough support. The plan would be paid for by higher taxes on ornamental flowers, but there was not enough support for this.

Billions moved around before Kamer closed for election recess

Lower interest on study debts was one of many plans to overhaul the budget the parties supported on the last day before the Tweede Kamer goes on election recess. The Kamer voted on the tax laws for next year and several dozen amendment proposals, moving billions around at around 3:00 a.m.

The “left” plan to increase bank taxes (150 million euros) was already known. That should partly finance the increase in minimum wage. The “right” wants to maintain the discount on fuel excise duties for longer, which will cost 1.2 billion euros. They want to take money from the National Growth Fund, among other things, for this.

Because it will only be possible to make childcare virtually free from 2027 onwards, the tax credit for young parents must be maintained for longer and then phased out. A proposal by ChristenUnie received enough support for this. CDA and VVD want to reduce energy taxes (worth 100 million euros). That proposal also received a majority.

The VVD and SGP want to halve the proposed increase in the excise duty on alcoholic beverages. To pay for the 72 million euros that the treasury would miss out on as a result, they want to increase the excise duty on tobacco and gambling more. The Kamer adopted that motion.

Parties typically vote on the Tax Plan just before the new year. But because the parliamentary elections are next month, the votes were brought forward.

As the Cabinet collapsed this summer and is therefore outgoing, the emphasis was more on parliament’s plans. MP Omtzigt and VVD MP Slivo Erkens both said they didn’t like the hurried, night-time voting on the billion-euro plans. Both MPs themselves also submitted some far-reaching proposals.