For years the interest rate on student loans was 0%, but that is likely to change. Students would then have to pay back more than they borrow. Around a month ago, the Dutch Student Union (LSVb) and FNV Young & United started an online petition against raising the interest rate.
For years the two unions have fought to reinstate the basic student grant, which students will once again receive from September 2023. Now they want to ensure that students in the student loan system don’t lose even more money.
The basic student grant was discontinued in 2015, and student loan debt has risen since then. “Forty thousand euros is no longer an exception,” says Yasmin Ait Abderrahman, president of FNV Young & United.
According to her, students feel lied to. “We’ve been telling DUO for a long time: add the warning ‘borrowing money costs money’, but that didn’t happen. Politicians have actually encouraged student loans. Many students didn’t even know that the interest rate could be increased. Then they’ll feel cheated when that happens.”
Aren’t students responsible for reading the terms and conditions before taking out a loan? Ait Abderrahman: “That’s easy to say, but 17 and 18-year-olds are having to make choices that will affect the rest of their lives. And they’re always told that the loan conditions are so favourable.”
Students in the student loan system will soon receive a €1,400 reimbursement if they missed out on the basic student grant for four years. With a rising interest rate, they would quickly lose that money, the two unions say.
That’s true: someone who pays off a debt of €20,000 with an interest rate of just 1% will pay nearly €3,700 in interest over the course of 35 years. For those paying back their loans, student finance provider DUO always offers five years of fixed interest, so the rate can change in the meantime.
The interest stays lower than the commercial rates, since it is linked to the interest that the Dutch government pays. Because the government is so reliable, the interest rates are relatively low. In addition, any remaining debt is forgiven after 35 years of repayment.
One hundred thousand signatures is quite a lot. A previous petition to do away with the student loan system gathered some 90,000 signatures. But that number was also surpassed when a few cohorts demanded a refund of their tuition money.