Former students who faced discriminatory checks by student finance company Duo between 2012 and 2023 are to be entitled to compensation, education minister Rianne Letschert has told MPs in a briefing.

Last year, a ministry report concluded Duo did “indirectly discriminate” against youngsters with an ethnic minority background via its fraud strategy and algorithm.

The scandal came to light in June 2024 when broadcaster NOS and news website Investico said students with ethnic minority roots were “noticeably more often” accused of student loan or grant fraud than other students.

NOS and Investico spoke to 32 lawyers who had represented students accused of lying about where they lived. Of the 376 cases the lawyers were involved in, 97% involved students with ethnic minority roots. The figures were “shocking”, law professor Gijs van Dijck told Investico at the time.

Students who live away from home are entitled to a higher grant, and between 2012 and 2023, almost 27,000 students were visited by officials to check where they were living. Almost 10,000 of them were actually accused of fraud.

Duo had used an algorithm to look for potential fraud since 2012, based on potential risk indicators such as age and education, and trained using the “experience” of Duo investigators.

For example, youngsters who live with family members, such as a brother or aunt, form a potential risk, even though they are entitled by law to a grant as a live-out student – some €200 more a month than for home students. Vocational college students were also considered to be more likely to commit fraud.

Some 12,000 of the students visited at home by inspectors will get €500 in compensation, while 10,000 who had their grants cut or faced other sanctions will get €2,000.

Students who think they should get more money can register for a tailor-made solution and will need to supply evidence to back up their claim, the minister said.

The cost of the compensation scheme is put at €80 million.