Students respond to the basic grant and interest rate increase with a temporary stop and interest rate trick

Thousands of students have saved themselves money by cleverly responding to developments in student finance. For example, they temporarily suspend their student finance, so that they can benefit longer from the basic grant, which is expected to return after the summer. Or they used the ‘interest rate trick’ to keep the amount of interest they owe on their student debt as low as possible.

The Education Executive Agency (DUO) has informed ANP that approximately 19,000 students in higher education have temporarily suspended their student grants before January. That is about twice as many as normal, which indicates that many students are responding to the return of the basic grant.

Temporary halt

If the Senate soon approves the reintroduction of the basic grant, which is expected, students will be able to receive that grant again from the coming academic year. It may therefore be beneficial for current students to temporarily suspend their student grants and then restart them in September. They then save up their entitlements, so that they receive the basic grant for longer.

Students who use this option must make an effort. In the meantime, they will not be able to use their public transport card, will temporarily not receive a supplementary grant and will not be able to borrow during that period. The basic grant to which they are then entitled for longer is 274.90 euros per month for students living away from home. This amount will be supplemented in the coming year by an extra EUR 164.30 per month due to the increased costs for energy, for example.

interest trick

Another way students save themselves money is the interest trick. This means that students temporarily suspend their student finance and immediately apply again. Thus, their loan is divided into two parts. This can be beneficial, because the interest rate on student loans is still very low, but it is quite possible that it will rise in the coming years.

Those who temporarily stopped their student finance in January and started it again in February, could fix the interest of 0.46 percent for 5 years on the debt accrued up to that point. That was most favorable for students who started their studies before 2015, because that group has had to pay 1.78 percent interest since the beginning of this year.

Fewer student loans

The figures from DUO also show that fewer students have started borrowing money from the government. In 2019-2020, 325,000 students still had a student loan, now there are 270,000. The agency does not know exactly how this happened. At the same time, DUO sees that more students are applying for a supplementary grant. The amount of this amount depends on the income of the parents.

Because some of the students left money behind, DUO adjusted the application procedure for student finance at the beginning of this year. “The option request additional grant is now enabled by default. We are already seeing the first positive effects of this, ”says the service.

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