Student loan interest cannot be frozen in 2024, minister says

It is not technically feasible to freeze the study interest for students who fall under the loan system next year at the 2023 level, Education Minister Robbert Dijkgraaf wrote this to the Tweede Kamer on Friday. The Tweede Kamer had previously called on him to do so in a motion; a parliamentary majority supported a proposal from GroenLinks-PvdA and ChristenUnie at the end of October.

The minister wrote that it is "technically not feasible" to introduce an interest rate measure specifically for the student loan group from January 1. According to him, this would require major adjustments to the Education Executive Service (DUO) systems, which cannot be implemented until 1 January 2026 at the earliest. He also argued that the measure would require a change to the Student Funding Act 2000 before January 1, which he described as "not realistic".

The Tweede Kamer took this conclusion into account and asked the minister in this case to consider freezing student loan interest rates "on a broader basis". Dijkgraaf promised to do this in conjunction with another request from the Kamer to "reduce the interest rate for the student loan scheme group". This is an amendment proposed by MP Pieter Omtzigt, which also received a majority last month.

Last month, there were many demonstrations against the increase in the interest rate on student loans for the so-called "unfortunate generation". For most people who borrowed money during their studies, it is now 0.46 percent. On January 1, it will be 2.56 percent, a five-fold increase and the highest level in 14 years. The increase is due to higher interest rates on the capital market.

According to De Volkskrant, the interest rate for MBO students will increase from 1.78 to 2.95 percent. As a result, the loan will be much less attractive for recent graduates and for students who are or were already covered by the loan scheme.

The relief for students concerning study interests is to be paid for by reducing tax benefits for expats. A parliamentary majority also expressed its opinion on this last month.

The Intercity Student Consultation (ISO) considers the news a difficult message to swallow. "(Former) students had high hopes of finally getting some financial breathing space," said chairwoman Demi Janssen. "We hope that the new Tweede Kamer will soon come up with an action plan to accommodate this group."