Around 26,000 students halted their student loan for a month from 1 January to lock in the current low interest rate on their debt. A TU student came up with that trick.
The Education Executive Agency DUO revealed these figures on Thursday the 16th of March. In response to intense media interest in this ‘interest-rate trick’ and other developments in student financing, DUO decided to carry out a brief analysis.
The interest rate on student debt has risen above zero for the first time in years and currently stands at 0.46 percent. As this trend is expected to continue, students could find themselves facing thousands of euros in additional costs.
Splitting the debt
TU Delft students Joep de Jong and other students discovered that there was an advantage to be gained from ‘splitting’ their student debt. By halting their student loan from 1 January, they could freeze the interest rate on their current student debt at 0.46 percent for a five-year period. They could then restart their student financing from 1 February. contacted Delta. “I wanted more students to know about this option so that they could use it.”
No fewer than 26,000 students decided this was worth doing. This figure is four percent of the total number with student loans at higher education institutions in the Netherlands. In previous years, hardly any students halted their financing in this way. This number is much higher than Joep had expected. “I was just texting with someone about it this week. I wrote that it would be ‘definitely a thousand'. 26 thousand is really absurdly high. I really didn’t see that coming. I am very happy that I was able to help so many students.”
‘I am very happy that I was able to help so many students’
After Joep’s interest trick became public, he got a lot of reactions. From TU students, but also nationwide. “It went like wildfire, within no time tens of thousands of students knew about it,” he says. It produced funny situations, he says. “Then I would arrive in Amsterdam or Utrecht and someone would go and explain the trick to me.”
He noticed that it remained unclear to many students exactly how to apply interest tricks. “I got questions from fellow students at TU, but also from strangers on LinkedIn.” He estimates that he received about a hundred messages on LinkedIn. “At one point, another student had made a detailed guide, including screenshots, telling them exactly how to stop their student loans. I forwarded that one to many people who approached me.”
Basic student grant
In addition, an estimated nine thousand students had their student loans temporarily discontinued from 1 January, ahead of the reintroduction of the basic student grant in September. By doing so, they are ‘shelving’ their entitlement to student financing to reclaim it again from September, in combination with the basic student grant.
This figure is an estimate: students are always able to stop their student loans on 1 January and don’t have to provide a reason, but this year the figure is around nine thousand higher than normal.
This option is still open to students who have only just heard about it. They can pause their student loan from 1 April, for example, which would entitle them to a few months of basic student grant.
However, this only applies to students who are still entitled to the ‘performance-related grant’ for completing their higher education programme within the official time frame. In most cases, this is four years (unless you are taking a longer Master’s programme). There are a few more complications besides, as DUO explains on its website.
DUO estimates that 303,000 students from the loan system will be entitled to the basic student grant next year. However, their entitlement will cover a shorter period than first-time students who begin their programme in September.
HOP, Bas Belleman/ Delta