Illustration Shutterstock DUO will inform students about the new interest rate this month, but calculations can already be made. Based on this year’s interest rates, the rate for next year is expected to settle at around 2.6 per cent.
Interest on student loans is paired with the interest the Dutch government pays over its five-year loans. The average is determined based on the year running from October to the next October. The Dutch government was rewarded with extra money for years when interest rates dropped below zero. Students paid no interest on their debts. In 2023, interest rates were set at 0.46 per cent, rising to 2.6 per cent this year. Many students were upset over this increase as they had assumed their loans were interest-free.
The official announcement for next year has yet to be made, so small fluctuations may occur. The ministry bases its calculations on state loans with a duration of 4.5 to 5.5 years. DUO is expected to announce the rates next week.
Interest and repayment – 5 important issues
1. Interest rates on student loans apply during the period a student is studying. Hence, someone who loans 10,000 euros this year and nothing else will have incurred an additional debt of 256 euros by the end of the year.
2. After graduation, students have two years before they are required to start repaying their loans in January. They have 35 years plus five break years to do so.
3. The sum of the interest may add up to aq considerable amount. Suppose you take 35 years to repay your ten-thousand-euro loan against 2.56 per cent interest; in that case, the total sum in interest amounts to more than 5000 euros.
4. DUO has posted a tool online and has improved its communication about interest in student loans. Those repaying have a five-year fixed interest rate. Hence, those who began repaying in 2023 will have a 0.46 per cent interest rate until January 2028.
5. DUO takes incomes into account. Graduates with limited incomes repay less. If your income is under 30,000 euros per annum, your monthly repayment never exceeds 26 euros. The remainder is forgiven. Please be aware however: your partner’s income is included.
