Basic grant becomes loan
A new student finance system was introduced for students on 1 September 2015. For students who are going to study for the first time, the basic grant will be canceled. From now on, the money for the study must be borrowed entirely from the Education Executive Agency (DUO). Students who already studied before that date still fall under the old system whereby a non-resident student receives a basic grant of 286 euros. Under the old system, a resident student receives 103 euros. There is also a supplementary grant, a college loan and a loan (299 euros). Together this is 1017 euros.
In the new system (after 1 September 2015) the student receives a loan of 917 euros and a college credit of 162 euros. The debts for students will increase considerably. The repayment period is going up considerably; a student now gets 35 years from the government to repay his loan.
Students borrow to save
The low interest rate charged by DUO has seduced one third of the students to borrow more money than they actually need. The idea of having some savings after the study appeals to enough young people. Some people want to use the money to pay for costs if they buy a house after their studies. Tudy believes that this behavior is not wise. It is very tempting to spend the money for other things such as vacation or personal expenses.
Study debt and mortgage
Banks count the study debt to a limited extent in their calculation of the maximum mortgage. For example, it can be read on the Metobank website that a study debt from before July 2015 counts for 0.75%. If one had a study debt of 15,000 euros, the monthly costs would be 0.75% x 15,000 = 112 euros. One could then borrow around 21,000 euros less for a mortgage than someone who would have no study debt at all. A study debt that arose after July 2015 counts for only 0.45% in the mortgage calculation. This is because students in the new student finance system are given 35 years to repay their study debt.
The Tudy Student Survey 2015 showed that a large proportion of the students thought it important to save. A third (31%) of the respondents indicated that they borrow more than they actually needed. The money was not spent but put aside as savings. In the 2011/2012 period, only 13% of the students borrowed more money to save. It is mainly those who live at home and / or have a part-time job that can save the most. Seventeen percent of the students said they didn’t have 100 euros in savings. Thirteen percent saved nothing. Usually because they can’t afford to miss it.