ISO advocates for both providing better information on the consequences of student loan debt and for measures to mitigate these consequences. Van den Brink feels the government should force banks to provide higher mortgages.
Doesn’t it make sense that debts play a role when you approach a bank for a mortgage?
“Well, yes, but student loan debts are different. The minister keeps on saying how favourable the conditions are for a student loan, and on the DUO Education Executive Agency website, no information can be found on the consequences of borrowing when you apply for a mortgage in the future. You can’t tell me that young people aged seventeen or eighteen are actually going to have the awareness to think about a mortgage. And in the past, if you finished within fifteen years, the rest of your debt was cancelled. Now you could spend 35 years paying it off.”
Since the student loan system was introduced in 2015, there has been an increase in the number of students with a loan, and the amount being borrowed is also rising. This has a drastic effect on the chances of getting a mortgage, says ISO. With a gross income of €40,000 and an average student loan debt of €21,000, the maximum mortgage that can be taken out is lowered by €42,274 (old system) or €25,418 (new system).
Furthermore, ISO contends there is another strange practice going on. Banks look at the original student loan debt. So if you’ve been repaying your loan for ten years, this will in principle have no effect when taking out a mortgage. Banks might offer ‘customised’ services where they take into account your lower level of debt, but they aren’t required to do so.
These rules are in place to protect people from taking out mortgages they can’t afford. Don’t you feel that is necessary?
“You don’t have to recklessly plunge people into debt, but it it’s unrealistic to only look at the original debt. It’s odd that repaying your student loan has no effect on your maximum mortgage. It could make a difference of thousands of euros if the banks took this into account.”
Student loan debts are not registered with the Credit Registration Bureau (BKR). Proponents of the new loan system felt that this would fuel a fear of taking out a loan. As a result, former students now often conceal the fact that they have a student loan debt, even though that is a punishable offence.
What does a student loan debt mean for a potential mortgage? The broadcaster NOS op 3 calculated that the mortgage you can take out is reduced by tens of thousands of euros.