Current student loan system set to be abolished

The student loan system in Dutch higher education will be phased out from September 2024. This decision was taken in the run-up to the elections, which witnessed the CDA and ChristenUnie declare their support for restoring the basic student stipend, while D66 revealed intentions to fund student aid through taxes. The VVD was the only party to pledge to keep the existing lending system in place.

The new coalition agreement instead pledges to return to funding for students that includes a basic, non-returnable grant for all students and an income-dependent additional grant. The new administration is presently working to repeal the dreaded loan system, which resulted in everyone who began studying in or after 2015 being stuck with much higher student debt. Thank heavens for that!

What does this shift in the lending system entail? Let’s take a look at it more closely.

Changes ahead
You’re in luck if you’re planning to starting studying at university in the academic year 2023-24: this will be the first year in which the new system will be in place. It’s unclear exactly what it will look like, but it’ll be similar to the previous system, which existed until 2015. The most important aspects of this scheme, known as the performance grant, are outlined here.

Every student must meet the criteria of the performance grant. These are the following:

  • Everyone gets the same basic allowance (whether they live with their parents or not), regardless of their own and their parents’ income.
  • All students receive free travel on public transportation throughout the week or on weekends (you can choose whether you like weekends or weekdays) with a public transportation card
  • If you obtain a higher education diploma within ten years, you don’t have to pay back the basic grant and the costs of your public transportation card.
  • Additional interest-bearing loans must be repaid within 15 or 35 years.

Despite the fact that the loan system will be phased out, little is as yet known about how this will be accomplished.

The loan system in brief
In a nutshell, the lending system currently in place works as follows:

  • There is no basic grant; the whole amount you receive is an interest-bearing loan.
  • You repay this loan in 35 years, at a very low interest rate.
  • Each month, your loan might be changed upwards or decreased.
  • If you obtain a diploma within 10 years, you do not have to pay back the costs of your public transportation card.

As you can see, from 2015 students had to pay significantly more, as the previous basic grant was scrapped. As a result, their total student debt climbed dramatically, which can have long-term ramifications. When you wish to buy a house or take out another loan, for example, the student loan reduces the amount you can borrow. The system also increased the gap between rich and poor students: the rich just received more money from their parents, while poor students had to borrow higher sums. It’s no surprise, then, that the loan system is unpopular.

Student unions and organisations react
The National Student Union replies with joy, but caution. The elimination of the loan system is “wonderful news”, but the question now is what will replace it. Moreover, the government is currently working on compensation for students who used the loan system in the period 2015-2023. The ministry listed several options earlier this year. The cost would be between 1.4 and 11 billion euros.

Commenting on the student loan system, Quint Linderman, an Economics & Business Economics student at Erasmus University Rotterdam says, “As a loan student, it is a good practice not to look at the DUO site, for fear of the amount of debt you will see. It seems as if the new coalition is also afraid to face the real damage to this unlucky generation. We have always been told that you should still see your studies as ‘an investment in the future.’ I think the coalition should look at the loan students in the same way, by compensating us better.”

Written by Nicole Kerr