Students threaten court action over hike in interest on loans

Legal advisers are planning to take the Dutch government to court to challenge the fivefold increase in interest on student loans next year.

The interest charged on student debt is linked to the interest on five-year government bonds, which has risen sharply as a result of the European Central Bank hiking its base rate to 4% this year.

From January 1 students will have to pay 2.56% on top of their outstanding balance, compared to 0.46% this year.

Student grants have been reinstated for the current academic year, eight years after the government replaced them with loans.

Existing students who have financed part of their courses themselves will have up to €1,436 reimbursed by the government, while former students will have their debt reduced by €1,802 or be compensated if the loan has been paid off.

Legal Advice Wanted, which earlier this year successfully challenged the government’s decision to exclude students from financial support to pay energy bills, said the government had not given students clear enough warnings about the risks of borrowing.

‘Never free’

“If you look at what banks have to do nowadays, it’s very wide ranging. It would be strange if the same duty of care didn’t apply to the government,” Robin Bosch, founder of Legal Advice Wanted, told AD.

Trade union spokeswoman Yasmin Ait Abderrahman, of FNV Young & United, said students felt ripped off because they had no opportunity to fix their interest rate when they took out the loan.

“This is yet another stab in the back for the unfortunate generation that has already had to endure so much,” she said.

But the student finance agency DUO rejected the accusation and said students should have been aware that taking out a loan had cost implications.

“It’s actually unique that the interest rate was zero,” said spokeswoman Tea Jonkman. “We’re surprised by the assumption that borrowing is free. We never shouted ‘know what you’re borrowing’ in people’s faces, but a loan is never free.”