Interest on student debt will finally be reduced

This month, DUO will inform students about the new interest rate for the year 2026. Given last year's interest rates, this is likely to be 2.3 per cent, compared to the current rate of 2.57 per cent.

For years, the interest rate was zero per cent, so borrowing from DUO cost nothing extra. Things didn't stay that way, however. In 2023, the interest rate rose to 0.46 per cent and then jumped to 2.56 per cent a year later. This worried students who thought that borrowing from DUO was free. A year later, the interest rate rose another hundredth to 2.57 per cent.

There were years when interest rates on student loans were much higher. In 2008, for example, the rate was more than 4 per cent. Student loans were even more expensive in the 1990s, when interest rates ranged from 6 to 10 per cent. In 1992, students even paid over 11 per cent.

The official calculation of the interest rate for the following year is not yet known and may therefore vary slightly from this estimation. The Ministry of Education bases its calculation on the interest rate that the government itself has to pay on government bonds with a maturity of between 4.5 and 5.5 years.

During the course of study
Interest on student loans accrues during the course of study. To illustrate, a loan of 10,000 euros at a rate of 2.57 per cent grows by 257 euros in one year.

After graduating, students are given a two-year grace period, after which they start repaying their loans in January. In principle, they have 35 years to do so, plus five years' respite if desired. At the end of those 35 years, the remainder is written off.

The total interest amount can add up to a considerable sum. Suppose you repay a debt of 10,000 euros over 35 years at an interest rate of 2.57 per cent. In that case, you will pay almost 5,900 euros in interest.

‘The interest rate reduction is nowhere near enough,’ says Sarah Evink, chair of the National Student Association (ISO). ‘Students who come from less affluent backgrounds are precisely those who must borrow a lot. Such an interest rate generates substantial inequality between the students who are financially supported by their parents and those who are not.’

DUO offers an online calculation tool and has even enhanced its information on interest rates. For those who are repaying their loans, the interest rate is fixed for five years at a time. Anyone who started repaying their loan in 2023 will therefore still have an interest rate of 0.46 per cent, which will remain unchanged until January 2028.

Legal action
Outraged students sought to take legal action against the 2023 interest rate increase. They argued that DUO had not provided them with adequate information. However, no further updates have emerged regarding this legal action. Recently, the judge ruled in an individual case that the government is entitled to adjust the interest rate in accordance with the established rules.

This article only concerns the system in which students repay their debts over a period of 35 years. Under the old student finance system, former students had to do so within 15 years. The interest rate was also calculated differently. Some former students are still in that system.