{"id":96680,"date":"2019-04-02T13:34:15","date_gmt":"2019-04-02T11:34:15","guid":{"rendered":"https:\/\/www.erasmusmagazine.nl\/en\/?p=96680"},"modified":"2025-12-19T11:23:15","modified_gmt":"2025-12-19T10:23:15","slug":"everything-you-need-to-know-about-your-student-loan","status":"publish","type":"post","link":"https:\/\/www.erasmusmagazine.nl\/en\/2019\/04\/02\/everything-you-need-to-know-about-your-student-loan\/","title":{"rendered":"Everything you need to know about your student loan"},"content":{"rendered":"

We\u2019ve all heard it before: the disclaimers in TV commercials echoed in the words of wisdom from your parents: borrowing money costs money<\/em>, something you should try to avoid. There were major changes in store for students in 2015 when the student finance system was replaced with a student loan system: no basic grant anymore, but a loan you have to repay. Because it\u2019s fairly new, students and their parents still have a lot of questions about the system. Thea Jonkman, spokeswoman for the Education Executive Agency (DUO, the body that provides the loans) and David Schippers of the Hypotheek Adviseur explain how your student loan debt \u2013 large or small \u2013 actually affects you.<\/p>\n

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\n\t\n\n<\/svg>\n<\/span>\n\tImage by:<\/span>\n\n\t\t\t\n\t\t\t\t\t\t\tElzeline Kooy<\/a>\t\t\t\t\t<\/span>\n\t<\/p>\n<\/figcaption><\/figure>

Jonkman finds the difference between the old and new system quite simple. The old system provided students with study financing (popularly referred to as stufi<\/em>), which also allowed students to borrow an additional amount. The amount borrowed had to be repaid within fifteen years. The key difference with the new system is that the basic grant is no longer a non-repayable grant, but it\u2019s a \u2018study advance\u2019, or, in other words, a loan. However, students now have thirty-five years to repay this loan. The new system only applies to students in higher education. Senior secondary vocational education (MBO) students are still eligible to receive the basic grant.<\/p>\n

There\u2019s a misconception that the basic grant disappeared because of a lack of funds, says Jonkman. The most important reason is improving quality in education. \u201cIf you have a single big lump sum of money, you have to think carefully about how you\u2019ll allocate it. By getting rid of the basic grant, much more money can be spent on improving education.\u201d<\/p>\n

Gap<\/h2>\n\t
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\n\t\t\u2018It remains to be seen whether there will be a widening gap between students who have parents who pay for everything and students where that\u2019s not the case.\u2019\n\t<\/blockquote>\n\n\t<\/figure>\n\t\t<\/div>\n\t<\/div>\n

Right, so you\u2019ll be repaying your loan when you complete your studies. The amount to be repaid is calculated by DUO and you can also figure it out for yourself using the calculation tool [link] on their website. Jonkman: \u201cThe calculation tool doesn\u2019t look at which study programme or which job corresponds to which salary. A doctor will generally earn more than an art history graduate, but the doctor will also pay back more once he or she starts working. At DUO we use calculation models that show how much you can repay. This is done in cooperation with the Tax and Customs Administration; they can see exactly how much is deposited in your account every month.\u201d<\/p>\n

\u201cIt remains to be seen whether there will be a widening gap between students who have parents who pay for everything and students where that\u2019s not the case. It\u2019s always the student\u2019s choice to take out a loan. Of course that choice is easier for some students than for others, but ultimately, life isn\u2019t always fair. There is an option where you could be eligible for a supplemental grant if your parents are in a certain income bracket and this grant is more than what you got under the old system.\u201d<\/p>\n

Lower mortgage loan<\/h2>

One concern that\u2019s on students\u2019 minds is that they\u2019ll be unable to qualify for a mortgage loan due to their student loan debt. This is nonsense, says Jonkman: \u201cIt\u2019s always possible to get a mortgage loan if you hold a permanent job. But this loan amount could be quite a bit lower if you have debts. But one perk that \u2018new borrowers\u2019 have is that the calculation is made with a lower weighting factor, because you have more time to repay your loan. Since your monthly repayment instalments are often lower, this means you can borrow more for your mortgage.\u201d<\/p>\n

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\n\t\n\n<\/svg>\n<\/span>\n\tImage by:<\/span>\n\n\t\t\t\n\t\t\t\t\t\t\tElzeline Kooy<\/a>\t\t\t\t\t<\/span>\n\t<\/p>\n<\/figcaption><\/figure>

How much can you borrow for a mortgage? Here\u2019s an example<\/h2>\t
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According to David Schippers, the maximum amount you can borrow for a mortgage is linked to your debts. Schippers illustrates this using a student, Rosalie, as an example of how the calculation is made. Rosalie has found a job after finishing her studies and earns 40,000 euros gross annually. She accrued a student loan debt of 30,000 euros during her studies. She wants to borrow the maximum amount for her mortgage, which amounts to \u2013 calculated using De Hypotheek Adviseur\u2019s official software \u2013 118,000 euros. Without a student loan debt she would have been able to borrow 185,000 euros. But<\/em> Rosalie has a partner. Her partner also earns around 40,000 euros annually and has a student loan debt of 15,000 euros. Together they\u2019re eligible for a mortgage loan of 350,000 euros.<\/p>\n

Additionally, the calculation considers the original debt amount without taking into account extra repayments already made. So if you were to wait around ten years after your graduation and you\u2019ve repaid half of your student loan debt, the calculation is still made using the original outstanding debt. Unless you repay a larger amount of something like five thousand euros in one fell swoop. In that case, the five thousand euros will be deducted from the total debt.<\/p>\n\n\t<\/div>\n

\u201cThe housing market is overheated to such a degree that it\u2019s almost impossible for first-time buyers to purchase a home, especially with the average price for a house currently at around 300,000 euros. In addition to the student loan debt that is deducted from the available loan amount, don\u2019t forget the purchasing costs that also have to be paid by the purchaser. This alone means you might have to cough up as much as 20,000 euros.\u201d<\/p>\n

Fraud<\/h2>

As a mortgage lender, you sometimes encounter people who don\u2019t disclose their student loan debt. This, says Schippers, is a very stupid thing to do. \u201cBy not disclosing your student loan debt, you\u2019re basically committing fraud. Remember that a mortgage loan is always immediately due and payable. If a bank discovers you lied about your student loan debt, the bank can say it should never have provided a mortgage loan in the first place and demand repayment of the full amount. And you\u2019re left picking up the pieces. Even though a student loan debt isn\u2019t registered with the Credit Registration Office, I\u2019d like to give you a tip: bear in mind that this will change in the future, there\u2019s no escaping it.\u201d Whether that will actually happen is unclear: Jonkman states she hasn\u2019t seen any signs that the Credit Registration Office plans to register student loan debts.<\/p>\n

Family banking<\/h2>\n\t
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\n\t\t\u2018The gap between rich and poor is a given, no matter how unfair or frustrating it may be.\u2019\n\t<\/blockquote>\n\n\t<\/figure>\n\t\t<\/div>\n\t<\/div>\n

Schippers fears the loan system will create a widening gap between rich and poor. \u201cIn practice, parents often help out when it comes to obtaining a mortgage. Sometimes through a guarantee or through \u2018family banking\u2019, which uses utilises gift tax. Unfortunately, not every graduate who is a first-time buyer has parents who can just hand over a pile of cash or act as a guarantor for their child\u2019s mortgage. Is that fair? No. But it will always be like this. The gap between rich and poor is a given, no matter how unfair or frustrating it may be.\u201d<\/p>\n

\u201cOne result of student loan debts combined with an overheated housing market is that the highly educated will force less educated people out of rental homes. As a consequence you\u2019ll see that people who are less well educated will have to live with their parents until they\u2019re thirty as they wait for public sector housing to become available,\u201d predicts Schippers.<\/p>\n

Wildcard years<\/h2>

In spite of all this, Jonkman doesn\u2019t think that students in general need to be overly concerned about paying back their loans. \u201cThis always depends on how much you earn. It\u2019s entirely possible that you were unable to repay your debt after thirty-five years. You still don\u2019t need to be concerned: your debt will be cancelled. If you\u2019re unable to find any kind of job after graduation, then the ability-to-pay principle applies: if your income is lower than the statutory minimum for repayment, then you don\u2019t have to repay your debt. In this case, the repayment term of thirty-five months isn\u2019t extended, it remains unchanged. But each year they\u2019ll reassess your situation to check if you have a job or if you\u2019re receiving benefits.<\/p>\n

You also have the \u2018wildcard years\u2019: during the years where you\u2019re repaying your loan, you\u2019re entitled to five wildcards. For each wildcard, you don\u2019t have to make any loan payments in that year. You can\u2019t use a wildcard in consecutive years and when used, that year is<\/em> added to the thirty-five. This could come in handy if you want to take a trip around the world and you have no income for that year.\u201d<\/p>\n\n\t

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\n\t\t\u2018You don\u2019t want to end up detained at an airport or stuck at an embassy because you failed to repay your loan.\u2019\n\t<\/blockquote>\n\n\t<\/figure>\n\t\t<\/div>\n\t<\/div>\n

Emigrating to escape your debts?<\/h2>

A trip around the world is fine, but leaving for abroad to avoid repaying your loan isn\u2019t. \u201cEmigrating is permitted, but you have to make sure DUO knows your whereabouts,\u201d says Jonkman. \u201cYou don\u2019t want to end up detained at an airport or stuck at an embassy because you failed to repay your loan. Aside from that, students don\u2019t have much to worry about. Enjoy your time as a student and think carefully before borrowing money.\u201d<\/p>\n\n\t

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