Student loan repayments spike in the face of interest rate hikes

Almost one in three people with student debt made extra repayments in 2023. On average, they paid back an additional 3,000 euros. This is partly due to the recent interest rate hikes, DUO believes.

DUO saw a sudden spike in student loan repayments towards the end of last year, the executive agency for education announced today. This was probably a reaction to the news that interest rates on student loans were going to rise, which came as a surprise to many. For years, students were able to take out free loans, but in October Het Financieele Dagblad calculated that the interest rate would start rising from the beginning of 2024, from 0.46 to 2.5 percent.

Nearly 229,000 DUO debtors paid back 708 million euros more than they had to in 2023. In previous years, this amount ranged between 400 and 480 million euros. In addition, 47,000 people repaid their entire debt by making additional repayments, compared to 36,000 previously.

Besides the rising interest rate, new mortgage rules are also motivating former students to pay off their loans. Since January, banks have been basing their mortgage offers on homebuyers’ actual, current debt, whereas previously they used the original loan amount. This means that you can now get a higher mortgage by making extra repayments.