Abolishing interest on student debt costs hundreds of millions

No interest on student debt? That is estimated to cost the government 780 million euros per year, according to answers to substantive questions from the House of Representatives about the State Budget.

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The House of Representatives put forward a whole raft of questions to the Minister of Education in advance of the debate on next year’s budget. The interest on student debt featured among them.

Those questions have now been answered. How much would it cost to keep the interest on student debt at zero percent? It is hard to make a good estimate, says Education Minister Robbert Dijkgraaf in his answer, but he tries to nevertheless.

780 million

The total student debt is currently more than 28 billion euros and according to the Netherlands Bureau for Economic Policy Analysis the average interest rate in the long term will be 2.75 percent. That boils down to 780 million euros per year.

There are currently two levels of interest rate. For students and former students under the student loan system the interest rate will rise on 1 January to 0.46 percent, while senior secondary vocational students as well as students and former students under the old system will pay 1.78 percent. The interest rate for people paying off their loan is fixed for five years.

The House of Representatives was keen to know what it would cost if they all paid 0.46 percent. And in the short term, not the long term. In the coming five years it would cost the government around 40 million euros for the senior secondary vocational students, plus 280 million for the current and former higher education students under the old system.

When the basic student grant returns in September 2023, new senior secondary vocational students will have the same loan conditions as students in higher education. They will pay the same interest rates and will be allowed to spread their repayments over 35 years. The government will allow senior secondary vocational students who started before this date and are still entitled to student finance to choose which loan conditions they want applied to them.


The party asking the questions is not named as the questions are ‘substantive’. In practice, the questions often have a political overtone.

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