A trick to freeze interest on your student debt

From January 1, 2023, college students will be obliged to pay an interest of 0.46 percent on their student debt. What's more, interest rates are expected to rise even more in the near future. That got some keen-minded students thinking.

Splitting loans
Joep de Jong, a Maths student at TU Delft, noticed that the Education Executive Agency (DUO) splits loans in two when students pause their study financing to go on a gap year. When this happens, the students get to keep the interest they were paying on the first part of their loans for five years. Joep wondered if the same rule would apply to students only pausing their financing for a month.

The answer is yes, he tells Delta, TU Delft’s news outlet. But he wasn't the only one who discovered the loophole. Michiel Boeren devoted an entire LinkedIn post to the subject, while UCU student Casper de Haes told reporters from NOS op 3 about it.

Both Delta and NOS made sample calculations to show how students with a sizeable debt can save thousands of euros by splitting it in two.

Watch out
A spokesperson for DUO confirmed to Delta that this trick is possible but points out that students who split their loan in this fashion will also miss out on an entire month of student financing, which includes the entitlement to travel free of charge on public transport and any other supplementary grant they might receive.  “Those extra costs have to outweigh the amount you expect to save.”

The spokesperson also warns that students need to stop and reapply for their student loans on time. In addition, students approaching their thirties need to watch out. “If you are over thirty, you can no longer reapply for student financing. So, in some cases, it's actually better to stick with the loan you have.”

Exactly how many students will end up making use of the trick remains to be seen. In any case, the articles explaining the trick have been widely liked and shared on social media.