More than six in ten Dutch people are in favor of abolishing interest on student loans, according to a survey by ANP and Kieskompas, which was completed by a representative group of nearly 5,000 Dutch people.
At the end of 2016, after the abolition of the basic grant, the interest rate dropped to 0 percent and was fixed for five years. At the beginning of this year, the Ministry of Education, Culture and Science raised interest rates on student loans.
For students at higher vocational education or university, the interest rate is 0.46 percent, for mbo students an interest rate of 1.78 percent applies. HBO and university students who were already studying before 2015 must also pay the higher rate.
It is the first time since 2016 that the interest on student debt is higher than 0. The level of interest is linked to the interest that the government pays on government bonds.
When the loan system was introduced in 2015, according to many students, it was promised that the interest would be 0, the so-called ‘free borrowing’. Although the ministers of Education, Culture and Science never promised this, they did make statements that trivialized the student debts.
For example, successive ministers did not want student debt to be registered with the Credit Registration Office (BKR), because this would have a deterrent effect. The Netherlands Authority for the Financial Markets (AFM) was concerned about the financial resilience of households, because they would not be able to pay their mortgage that was too high, because their student debt could not be viewed by the mortgage provider.
From the 2023-2024 academic year, there will be another basic grant for higher education. Students who graduated during the loan system receive an allowance of approximately 1400 euros. That allowance still needs to be approved by the Senate.
Students who studied in the academic years 2015 to 2019 received a study voucher worth 2000 euros after their studies. They now receive a discount of 1770 euros on their loan or receive the amount if the loan has been repaid in the meantime. Furthermore, the loan system students are not compensated.
Many (former) students of the loan system are concerned about the rising interest rates and feel disadvantaged again. In addition to a much higher student debt, they are not compensated and they have to pay a higher interest rate. The majority of students who did not receive a basic grant have recently started paying back or will have to start doing so soon.
It is therefore not surprising that young adults in the survey by the ANP and Kieskompas most often indicated that they wanted to pay off the interest on student debt. Nearly 8 out of 10 young adults aged 18 to 34 said they wanted to return to ‘borrowing for free’. However, there is also a majority in favor of abolishing interest rates among all other age groups.
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