Borrowing money costs money is always warned. But for the next 5 years, this does not apply to students who take out a student loan with the Education Executive Agency. The interest rate from January 2017 has been set for the first time on the magical 0%.

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This means that you can borrow ‘free’ for the first 5 years. The interest rate was already low (0.01%) last year, but the student loan was never ‘free’ before.

5 years no interest

Graduates who have to pay off from 2017 do not pay interest in the first 5 years. Former students who have been paying for a longer period also benefit from the change. Every five years, their interest rate is set again.

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Government bonds

How is it that the interest has been canceled? The interest on your student debt is based, among other things, on the interest rate of the Dutch government bonds, and that is now historically low. For comparison: if you had to start paying back in 2002, you paid 4.03% interest. In 1992 the interest rate was at a peak: former students paid 11.08%.

Moreover, interest will not be lower than 0%. You would actually get paid to borrow, and that will make the government a little crazy.

Think forward

Whether it is wise to borrow fully? If you have the choice: no, because in 5 years the interest rate can be a lot higher. If you are unable to repay your student loan before the interest rate rises, you may end up with a nasty surprise.

If you still want to take advantage of the 0% interest rate, you can consider putting the funds you use into a savings report. In this way, it will give you a little something, and you can repay your debt immediately if the interest in 5 years is higher again.