Student loans in the Netherlands overwhelm young people

The interest rate on student loans in the Netherlands will rise next year, adding pressure to some 140,000 university students. This system, which gives students up to 35 years to repay the money, means that many enter the labor market with debts that are even taken into account when applying for a mortgage.

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The total debt of current and former students amounted to €24.4 billion in 2021according to the latest data from the CBS statistics agency, which means that 1.6 million people in the Netherlands had debts from their student stage.

On average, those under 20 years of age owe 2,600 eurosbut since they are still studying, they continue to accumulate debt, while people between 25 and 30 years old, who have generally finished their studies and have started to repay what they owe, have the highest student debt, with an average of 19,100 euros received as a loan.

How does this debt accumulate in total? It is made up of several components, but in general they come from a loan obtained by the students, added to the price of registration, the student transport card, and the complementary subsidy.

Different rules apply for loan repayment, and the interest rate depends on the type of loan. higher education chosen. All those who pay student debt have a fixed interest period of five years, although the new increase will affect some 140,000 young people, including some with outstanding debts from before 2008, according to the Ministry of Education.

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Those who, after finishing their studies, do not repay the loan, turn their debts into a burden on their fiscal history, until they put their accounts in order. A student debt is also taken into account when requesting, for example, a mortgage, something that the government itself warns young people on its website.

“Let’s imagine you have a student loan of 15,000 euros. This means that the mortgage lender assumes that you are going to return 0.65% of those 15,000 euros each month. This equals 97.50 euros per month. Therefore, you could no longer spend that amount on housing costs”, explains the Executive.

This is based on the basic grant system prior to 2015, but for those who have received a loan after that year, lenders assume that you will pay 0.35% of the original debt per month, which, in the end, determines the total amount of mortgage the person can receive. It remains to be seen how interest increases will affect this system.

During the past year, more than 2,700 Dutch women living abroad were unable to renew their passports as a result of student debt, which often had significant consequences for them, but DUO hopes this pressure will lead to alumni contacting the organization and resolving the issue. payment of your outstanding loans.