The interest on student loans has been at zero percent for some time now, but this is likely to change, according to the student organisation Interstedelijk Studenten Overleg (ISO). The association is concerned the government may start charging interest on this financial assistance and that students will have to pay hundreds of euros a year to the lender as a result, the broadcaster OOGTV reports.
The interest rate is determined on the basis of the average effective yield on a five-year Dutch government bond in the previous academic year. In recent years, the interest rate was always negative, which meant that the interest on student debt was zero percent.
But due to the current economic situation and rising inflation, it is possible that the interest on the student debt will exceed 1.5% in the coming years. On Tuesday, the Financieel Dagblad calculated that students may have to pay between 228 and 750 euros annually as interest.
That potential increase raised the hackles of the ISO. “The rising interest on student debt is yet another financial blow to students,” says ISO chairperson Lisanne de Roos. “After the empty promises about student debt not being counted in mortgage requests and the meager compensation for students who had no grants, students will now have to pay hundreds of euros a year in interest.”
According to the association, the government has failed to communicate the potential effect of the inflation on student loans. “A lot of students have no idea the interest on their loans may go up,” De Roos says. “They borrowed money because they believed they wouldn’t have to pay any interest.”
The Dutch government has recently announced plans to re-introduce basic grants for all students pursuing higher education, after it was scrapped in 2015.
According to the Statista portal, whereas in 2012, the average debt of a graduate in the Netherlands was roughly 14.5 thousand euros, by 2021, this had increased to just over 17.4 thousand euros.
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