Students announce action against 'devastating' interest rate hike

The Telegraaf, October 11, 2023. DFT Editorial

AMSTERDAM – Students are not willing to accept the announced quintupling of interest rates on student loans without a fight. The National Student Union (LSVb) is organizing a protest in front of the Dutch House of Representatives in two weeks against the substantial increase in interest rates. The union foresees “a devastating effect on both current students and former students” if the interest rate hike proceeds.

The interest that (former) students must pay on their student loans will rise to the highest level in fourteen years on January 1, 2024. For most students, the percentage will increase from 0.46% to 2.56%. This increase is not so much a political decision: the interest on student loans is linked to the interest that the government pays on five-year government bonds. If interest rates rise on the capital market, the interest paid by (former) students automatically follows.

Unrest

According to the LSVb, the proposed increase is causing great unrest among students. Chair Elisa Weehuizen sees “enormous financial despair among students.” They are already dealing with rising rental costs, higher tuition fees, and more expensive general living expenses. On the other hand, the basic grant has been reintroduced this academic year. The monthly amount is also extra high in the first academic year due to inflation. For example, in the 2023-2024 academic year, out-of-home students will receive a grant of €439.20, which is €274.90 basic grant plus €164.30 temporary increase. This increase will not be extended the following year. During the protest on October 25, the LSVb will advocate “stopping the interest rate increase and providing more compensation for students.” Especially now during election time, the union wants to hear from political parties “what their response is to the concerns of students.”

Legal Battle

The interest rate hike may also become the subject of a legal battle. Advisory firm Legal Advice Wanted says it is preparing a lawsuit against the State because, according to the firm’s lawyers, the interest rate hike is unlawful. They argue that the government did not adequately inform students about the financial risks associated with taking out a student loan.

For years, no interest had to be paid on student loans. According to the lawyers, the government has wrongly “suggested that the interest would remain at zero percent.”