2.5% student loan interest cap costs far more than planned
Education minister Rianne Letschert says a 2.5% cap on student loan interest would cost at least €160m a year, against the €40m a year reserved in the coalition agreement.
Education minister Rianne Letschert (D66) says she cannot work out the 2.5% cap on student loan interest with the €40m a year that the coalition parties D66, VVD and CDA reserved for it in their coalition agreement. In a letter to the Tweede Kamer, the lower house of parliament, she says the cap now costs at least €160m a year.
Why it matters
- DUO has set the 2027 rate at 2.70% for the 35-year repayment scheme, which covers most students and former students, up from 2.33% in 2026.
- For the 15-year scheme the 2027 rate is 3.28%, up from 2.29% in 2026.
- The ministry says any extra cost of a cap, now and in future, would have to come out of the education (OCW) budget, which could mean cuts elsewhere in education or research.
The ministry says the long-term interest rate, to which student loan interest is linked, rose from 2.7% to 3.3% amid growing geopolitical tensions, and could rise further. A 2.5% cap needs at least €120m a year on top of the €40m already reserved, and further rises would push the cost higher.
Unfortunately I have to conclude that with the €40m a year that has been reserved, I cannot work out a 2.5% interest cap. That really annoys me.Rianne Letschert, education minister
Letschert floated two alternatives: a fixed interest discount of about 0.2 percentage points, and a “moving ceiling”. The discount could cost more than the €40m, because high rates can make students repay more slowly. The minister says the moving ceiling is complicated, also for former students. The ministry says the alternatives would have no substantial effect on (former) students.
Interest on most student loans rises from 0% in 2022 to 2.70% in 2027
% per year · 2021–2027
Interest on most student loans rises from 0% in 2022 to 2.70% in 2027 (% per year). From 0 in 2021 to 2.7 in 2027; highest 2.7 in 2027, lowest 0 in 2021. Source: DUO.
View data
| Period | % per year |
|---|---|
| 2021 | 0 |
| 2022 | 0 |
| 2023 | 0.46 |
| 2024 | 2.56 |
| 2025 | 2.57 |
| 2026 | 2.33 |
| 2027 | 2.7 |
The Landelijke Studentenvakbond (LSVb), the national students' union, said it was furious. It called the cap “the only bright spot at the end of a long, dark tunnel” and said: “The only certainty this cabinet allows students is that interest will keep rising in the coming years.” The Interstedelijk Studenten Overleg (ISO), a student body, said: “The coalition has made a promise it now cannot make good on.”
Letschert will discuss the matter with MPs during the education budget debate on 27 and 29 October.
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Tweede Kamer
The House of Representatives, the lower and more powerful house of the Dutch parliament. Its 150 members are elected directly; it can amend bills and holds the cabinet to account.