Parliament decreases interest on loans for the so-called unlucky students

To many former and current students, the announcement that the interest rate on student loans would be increased from 0 to 0.46 percent this year came as a nasty surprise, especially considering the plans to increase it even further to 2.56 percent next year. Between 2015 and 2023, students in the Netherlands were not entitled to a basic allowance from the government. Those who didn't have enough money to support themselves throughout college had to take out a loan (or borrow more than they would otherwise). So, in addition to borrowing more money than previous generations of students, the so-called "unlucky generation" would now be facing an interest rise on top of that.

Expats
Several political parties were willing to meet these students in the middle. MP Pieter Omtzigt proposed to reduce the interest rate by cutting back on a tax reduction scheme for expats. The amendment he submitted (alongside parties GroenLinks, PvdA, ChristenUnie and Volt) got the majority vote in the House last week.

It is not clear yet how exactly this will affect students. According to Omtzigt, the gradual reduction of the tax reduction scheme will save the treasury 3 million euros in 2025, rising to 194 million euros in 2029 and beyond. These savings would be used “in their entirety” to lower the interest paid by the unlucky generation. However, the legislative amendment does not mention the exact percentage the interest rates will be reduced to, neither does it say when the new percentage would take effect. 

Freeze
An ample majority of the House supported a motion by GroenLinks urging the government to take a step back and freeze the interest for the unluckt generation to 0.46 percent in 2024, in anticipation of a legislative amendment. The resulting costs are to be covered by the expat scheme reduction proposed by Omtzigt. Incidentally, the latter voted against the motion because he isn’t sure his plan will yield enough funds.

Minister Dijkgraaf told the House that – calculated over the course of 35 years – it will cost around 9 billion euros to bring the interest for loan system students down to zero.

The amendment by D66 and SP to adjust the interest for all loan system students down to zero percent was only supported by GroenLinks, PvdA, Volt, Denk, PvdD and Bij1. The initiators wanted to finance the legislative amendment by increasing the Value-Added Tax (VAT) on flowers and plants and on tap water for large-scale consumers. This was to bring in 500 million euros per year.

Dutch National Students' Association chair Demi Janssen is disappointed the zero percent proposal didn’t make it. “Now it’s important not to let students hanging and to give them financial security.” ISO thinks that the freezing of the interest should go ahead as planned in any case, even if this requires extra coverage.