New employer programs ease student loan repayment
Beginning in 2025, major employers in the Netherlands will expand their benefits to include options for employees to repay their DUO student loans through individual choice budgets, a move expected to provide significant tax savings. The initiative, already present in some collective labor agreements (CAOs), will now reach tens of thousands of workers in diverse sectors.
The program allows employees to use their choice budgets for DUO loan repayments, effectively avoiding income tax on the repaid amounts. Participating companies include ProRail, ING, KPN, Schiphol, the UWV, and the Dutch government. By using this tax-efficient option, employees can save thousands of euros over the course of their repayment periods.
“The savings can amount to as much as half of the total student loan debt,” said CNV union representative Justine Feitsma.
For example, Jan, a civil servant with a 15,000 euros loan, uses 1,000 euros from his choice budget annually to make repayments. This approach saves him 530 euros in taxes each year, resulting in a total tax benefit of 7,965 euros over the repayment term. Similarly, Chantal, who has a 30,000 euros loan, receives a 1,050 euros annual benefit by repaying 2,000 euros through her budget, saving 15,810 euros in total.
Employers are setting varying limits on how much of the choice budget can be allocated to DUO loan repayments. For instance, the Dutch government allows a maximum of 2,000 euros annually, while KPN offers 5,000 euros every two years. Schiphol sets a cap of 2,500 euros per year, and ING provides a one-time maximum of 4,000 euros starting in April 2025. VGZ, which implemented the program in 2024, saw its allocated funds quickly claimed, with 94 employees receiving an average of 2,200 euros each in tax-free benefits.
Carlo Steenvoorden, HR director at KPN, highlighted the significance of the new benefit. “This program not only saves employees substantial money but also makes us a competitive employer, particularly for young graduates entering the workforce,” he said.
The new repayment options come at a time when Dutch graduates face increasing challenges in managing their DUO loans. Rising interest rates, which have climbed to over 2.5 percent from near-zero levels, have added financial strain.
According to Statistics Netherlands (CBS), approximately 1.6 million people in the Netherlands had student debt as of early 2023, with one million actively repaying. For many, the debt impacts their ability to secure mortgages and affects their financial well-being.
Feitsma underscored the mental and financial burden of student loans. “This initiative offers young employees more financial breathing room and alleviates some of the mental stress tied to long-term debt.”
To use the program, employees submit proof of their annual repayments to their employer, who reimburses the amount tax-free using the choice budget. This results in immediate savings on income tax, allowing borrowers to stretch their repayments further or pay down debts more quickly.
The total savings depend on an employee’s income and tax bracket. Some workers could save more than half of their debt over time, making the program one of the most financially advantageous uses of the choice budget.
CNV has long advocated for such measures, encouraging other employers to adopt similar programs. “There aren’t many uses for the choice budget that deliver such significant savings,” said Feitsma.
