In 2015, the Dutch government said good-bye to the basic grant and laid out the so-called ‘social loan system’ for students. At the time of writing this blog, this policy has been reversed: as of September 2023, most students are entitled to a basic grant again. In this article, I, myself a student who misses out on this grant, examine the policy regarding student financing in the Netherlands. To illustrate how the loan system has had an impact on the lives of students, the analysis of the policy is supplemented with the experiences of a Dutch student John (not his real name). In this way, I will investigate how social the social loan system has been.
First of all, it is interesting to look at the government’s motivation for switching from the basic grant to the social loan system. This is based on the belief that studying increases one’s chances at the labor market. Following the neoliberal discourse that was rampant at the time, it was simply seen as logical and fair that students would invest in themselves, considering they would benefit from this in the future. The money saved by the government was said to be used for the benefit of the quality of education.
It is called the social loan system because this policy was believed to be, well, social. Now that the government no longer finances the studies of the “lawyer´s daughter”, as education editor at Dutch newspaper NRC Patricia Veldhuis put it, it was believed that social differences would decrease. She explains that the governmental support of students who are often already from wealthy families seemed unfair to the “son of the baker”, who would not even have the possibility to go to university, and would therefore be disadvantaged twice.
However, it may be that the ‘social’ loan system actually increased social inequality. While the advocate was able to financially provide for her daughter’s studies, the baker’s son has been sentenced to take on a sky-high student debt, argues Veldhuis. The importance of the help from parents is underscribed by student John. During the interview, he emphasizes that he believes the loan system will result in less people entering higher education, especially for people whose parents cannot provide them with financial support. “Without my parents, I don’t think I would have been able to study”, or at least not in the same way, he explains.
While the advocate was able to financially provide for her daughter’s studies, the baker’s son has been sentenced to take on a sky-high student debt
John’s expectation that less people would start higher education due to the loan system turns out to be untrue, according to research by the CBS. Their results show that students from havo and vwo (the two most theoretical highschool levels in the Netherlands) enter higher education about as much as before the introduction of the loan system. However, in relation to the study progress, their research shows that students switch between studies less often and are more likely to get their degree within the nominal time.
In addition, the CBS have found that the study progress during the bachelor is dependent on the students´ socio-economic background. Students from the least prosperous groups are less likely to finish their studies within the nominal number of years and switch between studies more often. However, CBS argues this trend already started during the time the basic grant was still in place.
What has changed since the introduction of the new policy, however, is that students from the most prosperous groups who study applied sciences (the Dutch hbo) are now more likely to finish their studies within the nominal time. Their less wealthy peers do not show an increase in this behavior. In addition, the number of students who move on to a master’s degree has drastically decreased during the social loan system. The least prosperous students who do go for their masters are now much more likely to finish this within nominal time than before, while this is not the case for their fellow students from wealthier backgrounds.
The number of students who move on to a master’s degree after has drastically decreased during the social loan system
John has recently finished his bachelors and is doubting whether to go for a master’s degree or not. This is partly due to the performance grant, as he is no longer entitled to a basic grant. If he would quit or switch between masters, this will have serious financial consequences. “If I were entitled to a basic grant”, he explains, “I would have much more freedom. I can now only do a master’s degree if I work a lot on the side, because I no longer receive a contribution from my parents. That would mean that I could get less out of my master’s degree.”
These results illustrate the fact that students who studied under the loan system experience much more stress than students from other generations. Students report feeling worried about their future, and feel cheated on since the initial promises from the government are not met. For instance, student debt was said to be interest free and to not have an influence on the student’s possibility of obtaining a mortgage. After five years, however, these promises appear to have been neglected.
These facts are also reflected in John’s experiences. Last year, when it was announced that the interest-free student loan would disappear, his attitude towards his loan has changed noticeably. He explains how, when he started studying, he was not thinking too much about taking on the loan. This was due to the fact that everyone was in the same boat, there was no alternative, and the conditions for the loan seemed so good that it hardly felt like a risk. He adds, “I left the house straight away. I was seventeen years old. You know nothing about money at that age. During that time, I loaned a lot of money every month.”
What about the initial goal of the government to invest the money saved by the social loan system in the quality of education? The reality is that this never trickled down to the experience of the students. Although there was more money spent on education, the quality did not improve due to universities upscaling rather than improving their teaching for existing students. In addition, the COVID-19 pandemic measures may have caused universities to be forced to invest money in the adaptation of their education in order to be able to teach students online.
It is evident that the social loan system was not as social as was intended: the new system appears to have increased socio-economic inequality as well as stress and insecurity for students. It forced many young, even under-age, students to take on an enormous debt. While the loan appeared to be relatively risk-free at the time the social loan system was introduced, these promises were broken only a few years later. In conclusion, the social differences did not decrease, the quality of education did not improve and a whole generation of students is left in debt and stress, feeling like puppets in a failed government experiment.
It is evident that the social loan system was not as social as was intended: the new system increased socio-economic inequality as well as stress and insecurity for students
These effects might explain why the basic grant is back as of 2023. The height of the grants are very similar to what they were before 2015, but the number of students who are entitled to a supplementary grant is now higher. In the new basic grant policy, this supplement is provided for students whose legal guardians earn less than €70.000, compared to €53.900 before. Even though the basic grant is not enough to cover all expenses for students, the new policy regarding the supplementary grant might make it more ‘social’ than the social loan system.