Tax benefits for paying off your student loan? Not at UU

The benefit is being offered by large organisations such as ProRail, KPN and ING. The Dutch government is also offering civil servants the opportunity to pay off their student loans with tax benefits in the hope of becoming an attractive employer for recent graduates. Students in the University Council are wondering whether this might be a good option for UU.

After all, this would not only give the university an additional tool to recruit young talent but also strengthen a sense of community because UU graduates would be more inclined to work at the university. Council members wrote a memo (only accessible for readers with a Solis ID, Ed.) earlier this year, asking the Executive Board to explore the possibilities in this regard alongside local unions.

Limitations
In a written response (with Solis ID, ed.) published last month, the Executive Board explained that there are obstacles to overcome. For example, the current collective labour agreement stipulates that universities should prioritise tax reduction schemes that are attractive to as many employees as possible, and employees without student debt would not need the benefit.

In addition, there are limits to the work-related expenses scheme, which stipulates that employers can use part of their total wage costs to give employees tax-free allowances, but that amount is limited. If employers want to give more, they have to pay 80 percent tax on it. ‘We cannot take such a financial risk,’ writes the Executive Board.

Stopgap
According to the board, it is not self-evident for the university to have its own scheme. Therefore, UU prefers to wait and see what the ongoing collective labour agreement negotiations will bring. After all, the subject is also on their agenda. Trade unions want to include a clause in the new collective labour agreement (CAO) stipulating that employees can repay their student debt in a tax-efficient manner up to an amount of 2,000 euros per year. This is already possible for people working for the national government. Universities and unions will continue their negotiations at the end of this month.

The representatives of unions in Utrecht, who are consulting with the Executive Board within the Local Consultation Committee, support the introduction of the tax reduction. However, according to spokesperson Gerwin van Schie, they also consider it a ‘quick fix’. Instead, the unions would prefer to discuss ways to prevent high student debts, such as reducing tuition fees, increasing grants or waiving student debt. They are also concerned about the levelling effect this benefit could have. Employees who earn more would benefit more from such tax benefits. Gerwin: ‘We don't begrudge anyone, but it increases inequality.’