Senate still has concerns regarding higher interest rate on student loans

Yesterday the Senate discussed the bill to increase the interest on student loans. The Cabinet wishes to link the interest rate to the 10-year interest rate on government loans. If the bill is passed, former students with an average loan (21,000 euros) and an above-average income will see their monthly interest payment increase by approximately 12 euros, which will amount to more than 5,000 euros over the course of 35 years’ worth of interest payments. The plan is expected to add an annual 226 million euros to the government’s coffers.

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Psychological pressure

Although the bill was passed by the Lower House (by the smallest margin possible), the senators seem doubtful on the subject. Ruling party CDA thinks that the minister was right to call the repayment conditions (which will not change if the bill is passed) “socially responsible”. However, just like ChristenUnie, CDA wishes to receive an assurance that access to higher education will not be compromised, and wants the Minister for Education, Ingrid van Engelshoven, to provide better reasons for the bill. The party will not decide on the matter until after she has done so.

For its part, D66, too, is concerned. Alexander Rinnooy Kan, a senator for D66, fears that a reluctance to get a loan or fear of entering into debt may negatively affect both access to higher education and students’ mental wellbeing. Children from poorer families seem particularly likely to be affected by both. D66 wants the Minister for Education to conduct a study on the effects of the bill.

More money for the government

Senator Anne-Wil Duthler (formerly of VVD) has some concerns, as well. “Which problem is this bill supposed to solve?” She does not understand why the interest increase is only supposed to give the government additional spending money, without presenting students with any benefits whatsoever. She has also pointed out that the current interest rate is at a historical low and that she fears it will rise again in the next few years. Duthler has asked the Minister for Education whether she has taken this into account.

Ruling party VVD is in favour of the bill. Senator Jan Bruijn feels that it is important that the government’s finances be sorted out. He is of the opinion that everybody should contribute to this, including highly educated people who stand the best chance of landing good jobs. “The government won’t eat that money and won’t whisk it away. It will return it to the people.” He feels that this will allow everyone to profit from a tax cut.

The Minister for Education will answer some final questions tonight. The vote will be on 4 June.