The interest that (former) students have to pay on their student debt will rise to the highest level in fourteen years on January 1, 2024.
The interest rate will then go from 0.46 percent to 2.56 percent, the Education Executive Agency (DUO) said. The fivefold increase is due to the increased interest that the government itself has to pay to borrow money. The interest on student loans is linked to the interest on government bonds with a term of five years.
The fact that interest rates are rising rapidly does not necessarily mean that costs will immediately rise for everyone who has to repay. The interest rate for former students is always fixed for five years. Those who are lucky with the timing can therefore benefit from the low interest rate of just under half a percent for another five years. On the other hand, those who have completed further training in the past year will be faced with the higher interest rate from January. The same applies to former students whose fixed-interest period expires at the end of this year.
Response from Minister Dijkgraaf
Students and refunders can see the new percentage that applies to them in My DUO no later than October 18. They have already received an announcement about this by email.
Nowadays, almost all students can take 35 years to repay their student debt. The group that studied before 2015 must do so in 15 years. These people also have their own interest rate. This will increase from 1.78 percent now to 2.95 percent from January 1.
Education Minister Robbert Dijkgraaf can ‘well imagine’ that students are concerned about the higher loan. He says that DUO adjusts the interest that graduates have to pay on their student loans to their personal situation.
“For example, if you have little income, you will also pay little back each month,” says Dijkgraaf. Moreover, the minister believes that reintroducing the basic grant and temporary allowances for inflation and energy costs will provide ‘financial peace’ for some students.
Reintroduction of basic grant
The interest on student loans stood at 0 percent for six years. This was because the Dutch state itself did not have to pay money to borrow money on the capital market. Last year, interest rates rose slightly for the first time in years.
Due to the reintroduction of the basic grant, students in higher education have started to borrow slightly less. The number of students borrowing money has decreased by more than 93,000 according to DUO figures. The average monthly amount has fallen from 677.21 euros to 575.27 euros per month.