Banks need to take debts into account when providing a mortgage. They can request information about standard loans for a car or telephone from the National Credit Register (BKR) but they can’t do this with student loans.
This means that former students can conceal their student loans when requesting a mortgage. Fifteen per cent of former student first-time buyers actually do this. The solution is simple, stated the supervisory authority: register those loans, for example at the BKR.
Outgoing minister, Van Engelshoven isn’t keen on the idea, she tweeted. “I’ll repeat it one more time: for the cabinet it’s important that borrowing remains accessible for students so everyone can keep studying. A BKR registration of student loans could act as a deterrent, so we won’t be doing that.”
Even though student loans carry less weight than other debts, they do reduce the amount you have spare for monthly payments. During mortgage applications, banks must protect house-buyers from taking on mortgages that are too high.
But student organisation ISO was and is adamantly against this. They want students to be able to lie when requesting a mortgage and call registration with the BKR ‘a huge financial step backwards’.
“National Credit Register (BKR) registration of student loans will make it even more difficult for students to buy their first home”, stated chair Dahran Çoban. “The student loan system and the current housing market are in themselves already worrying enough for students. We shouldn’t make students pay even more for the fact that they need to borrow to study.”
Making student loans accessible for mortgage providers via the National Credit Register (BKR) or via DUO is certainly not a new proposal. In the past, Nibud, Eigen Huis association and the association of banks also appealed for this.
Students have not received a basic student grant since 2015, which has made studying thousands of euros more expensive. And student loans are shooting up. The loan conditions are, however, more favourable than before: the interest is low and you only need to start paying the loan off if your income allows this. The repayment term has also been extended from fifteen to thirty-five years.
The parties that devised the student loan system (VVD, PvdA, D66 and GroenLinks) didn’t want higher student loans to be made known to the BKR, as that would cause unnecessary anxiety about loans.
But the ChristenUnie party stated in 2016 that this gives liars a lead on the housing market, which is why the then opposition party wanted better registration. VVD, PvdA, D66 and PVV were against this, however, and together they had the majority.
In 2019, Minister Ollongren from the Ministry of the Interior also wanted to enable insight into student loans: this time via an app. But that faced even more resistance: apart from the SGP, the entire House of Representatives voted against it.
The AFM is now having another go. The supervisory authority thinks that the Ministers of Finance and Education should devise a solution together. Households with too high mortgages are much less able to cope with setbacks, it stated in the letter to the cabinet.