Mortgage providers will be taking into account how much students have repaid

From 1 January, people who have repaid part of their student loan will qualify for a higher mortgage. At present, banks are only allowed to take into account the amount of student debt at graduation.

 

This change, announced by then-Minister for Housing and Spatial Planning Hugo de Jonge a year ago, will be in effect from 1 January. In a letter sent to the Dutch House of Representatives this Wednesday, Minister De Jonge wrote that ‘additional repayments on student loans will be better taken into account when determining the maximum mortgage’. Currently, banks are not allowed to take into account student loan repayments, but they have been doing so in practice nonetheless.

BKR registration

The question of whether it should be mandatory for students to report their student loan to the Dutch Credit Registration Office (BKR) has been a subject of debate for years. When the current student loan system was introduced in 2015, it was agreed this would not be mandatory, as student loans were deemed fundamentally different from loans for items like expensive cars and it was argued that students’ anxieties about borrowing should not be raised unnecessarily. National student organisations were also opposed to mandatory registration.

However, criticism of this approach grew over time, with some questioning whether it was truly in students’ best interests to be able to conceal their student debt. After all, if people are unable to make their monthly mortgage payments due to student debt, they are even worse off. In recent years, various parties, including banks, the National Institute for Budget Information (Nibud), the Dutch Authority for the Financial Markets and the Dutch Association of (Prospective) Homeowners (Vereniging Eigen Huis), had lobbied for change to no avail. But that changed when the now caretaker government took office.

App

At present, mortgage providers have already found ways to obtain information about student loans. For example, by requesting former students to consent to the use of an app through which the mortgage provider can log into their account at the Education Executive Agency (DUO).