Tuesday 23 July 2019

Students furious as government ups interest on student loans

Photo: Depositphotos.com

Student campaign group LSVB has reacted angrily to news that the government is planning to extend the fixed interest rate period for student loans from five to 10 years because repayments will be more expensive, broadcaster NOS said on Friday.

Education minister Ingrid van Engelshoven has sent draft legislation to parliament extending the fixed period from five to 10 years to all loans taken out from 2020. The measure was included in the coalition agreement.

10-year loans are more expensive than five-year ones and the minister estimates students will have to pay back an extra 18% a month on their loans – €82 rather than €70 on the average loan of €21,000.

However, if students take the full 35 years to pay back the cash, they will be thousands of euros worse off, student groups say.

The measure will raise some €226m for the treasury and is necessary to keep the student loan system affordable, the minister said.

The government scrapped student grants in 2015 and pledged at the time the extra cash would be ploughed back into education. It also said the debt would not have an impact on mortgage applications.

However, it has transpired in the last few days that loans are being included by banks on assessing mortgage applications and that the money saved by scrapping grants has not yet been put into higher education.

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