The Social Loan System Makes Us Look a Bit More like the US

Will the student loan system, announced shortly before Ascension Day, bring American conditions to the Netherlands? In the Anglo-Saxon world, many students are cornered by sometimes sky-high debts after their studies. Although the effects might turn out better than expected, the Dutch system is becoming more and more similar to that of the United States.

Of course there are important differences. American universities are very expensive. The average annual cost for a bachelor’s degree at a private university in the U.S. is 33,000 euro. At New York University, one of the most expensive, a student pays 44,000 euro per year. If you want to study cheaper, you can go to a state university. Residents of that state get an education at a reduced rate: on average, 17,000 euro per year.

However, many scholarships are provided. In the Netherlands, students whose parents earn less than 46,000 euro per year will receive an income-dependent scholarship. In America, many more students receive scholarships, even when their parents earn more. The amount of the scholarship often depends partly on the talent and grades of students and partly on their financial situation. When I studied, I only had to pay 40 percent of the actual costs of my degree, housing and meals. The rest was reimbursed by the scholarship I received. Students often choose the institution with the best “deal.” In this regard has a “social” system like Minister Bussemaker’s long been in place in the U.S.

Debt Problem

In both countries, debt after graduation is becoming more and more similar. Bussemaker has calculated that the average student debt will increase from 15,000 to 21,000 euro. That last amount is also approximately the average debt of an American student after earning a bachelor’s degree.

The American government is aware of the debt problem; therefore, the conditions are rather favorable. Students can choose how much they want to repay per month and over which period. But Dutch students will be [treated] better still. American students are allowed 10 to 25 years to repay their debt; Dutch students will have 30 to 40 years. Americans spend 10 to 15 percent of their income on redemption; the Dutch do not have to pay off more than 4 percent. The interest is lower as well. Nonetheless, you start with a substantial debt when you are ready to enter the labor market and buy a house. There are currently 7 million ex-students in the U.S. who do not pay off their student debts in time. Despite favorable conditions in both countries, high debts come with risks.

In the Netherlands, politicians say that students will be compensated for the loss of study financing by the extra investments of 1 billion euro in the improvement of education, because their income will increase because of that. That remains to be seen.

Monodisciplinary

Another goal of the loan system is to make students graduate on time. If you have to pay for your studies yourself, it’s serious business. But that assumes that young students know exactly which specialization they want to pursue. In the U.S., this problem is partly overcome by the broad bachelor degrees that take four years and lead gradually to specializations. Only in the master’s stage does real specialization follow.

In the Netherlands, the classic university degree is monodisciplinary. By implementing so-called “matching” — a type of exploratory route of a number of days in summer — students would have to be more aware of the importance of a choice of degree. But these processes are limited and voluntary: too little, too late. It remains to be seen whether young students are capable of immediately picking the right university degree because of this. Maybe the loan system will change the first-year phase and give it a more general character to guide students in making the right choice.

The Netherlands will therefore not get any American conditions if the social loan system will remain generous and tuition kept within limits. But a rapprochement of both systems and the final debt for students is undeniably under way.