Interest Rates on Student Debt Rise Again - A Growing Burden for Graduates
Although the increase is small, students with significant debt will still face thousands in additional interest payments over time.
The interest rates on student debt in the Netherlands are set to increase slightly in 2025, leaving many former students facing additional financial burdens. Nearly 200,000 individuals, mostly from the group that has 35 years to repay their loans, will see their interest rate rise from 2.56% to 2.57%. For students who borrowed money under the old loan system and have a repayment period of 15 years, the rate will decrease from 2.95% to 2.21%.
Increased Costs for Graduates
The small increase in interest rates for the group repaying over 35 years may seem minor, but it has a significant financial impact in the long term. For example, students with a debt of €30,000 will end up paying an additional €15,000 in interest over the course of their repayment period. This leaves many former students paying more than 50% extra on top of their original debt.
The Intercity Student Consultation (ISO) and the National Student Union (LSVb) have both voiced their concerns about the rising interest rates. ISO chairman Mylou Miché expressed frustration, stating that this increasing financial burden is especially tough for the "unlucky generation" who were not eligible for a basic grant during their studies.
The Reintroduction of the Basic Grant and Protests for More Support
The basic grant was reintroduced for students in 2023, but the effects are not being felt by those who studied during the years when borrowing was the only option. Additionally, students continue to protest for an increase in the basic grant, arguing that it is not sufficient to cover rising living costs and inflation. Recent figures from Nibud show that students living away from home have lost 6.6% of their purchasing power, and many are struggling to make ends meet.
The National Student Union has planned protests across the country, including a large demonstration in The Hague on October 18. They are advocating for an increase in the basic grant and the cancellation of the long-term study fine, penalising students who take longer to graduate.
A Small Compensation, but Not Enough
While the government has set aside €1.4 billion to increase compensation for students affected by the loan system, many feel that the support is insufficient. Former students who studied during the loan system era will receive a small compensation of €34.17 per month, adding up to around €2,000 for the duration of their studies. However, for many, this is just a drop in the ocean compared to their total debt.
As interest rates continue to rise and financial pressures mount, many students are worried about the long-term effects of their student loans. With nearly 1.2 million former students still paying off debt and an average student loan of €17,800, the challenges are only becoming more daunting. Many are calling for stronger financial support and reforms to ensure that future generations are not burdened by unmanageable debt.