Former students are likely to pay more than the previously proposed maximum interest rate on their student loans. The challenge comes as interest rates have increased worldwide amid ongoing geopolitical uncertainty. As a result, the long-term interest rate applied to student loans is expected to rise from 2.7 percent to 3.3 percent.
Allocation
Funds had been set aside to limit student loan interest rates, but new calculations show that the allocated budget is insufficient to keep rates at the intended level. According to the government’s assessment, maintaining the proposed cap would require significantly more funding than originally anticipated.
Reducing the rate back to the proposed maximum of 2.5 percent would cost an estimated €120 million per year, far exceeding the amount currently reserved for the measure. The government has also warned that further increases in global interest rates cannot be ruled out. If borrowing costs continue to rise, maintaining a fixed cap could become even more expensive.
Options
As an alternative, policymakers are considering a fixed reduction of approximately 0.2 percentage points on the interest rate. Another option under discussion is a variable or “moving” cap. This would adjust alongside market conditions. However, officials acknowledge that such a system could be difficult to understand and implement.
The issue is expected to be a key topic during upcoming parliamentary discussions on the education budget. Lawmakers are set to debate how best to balance affordability for former students against growing budgetary pressures.
@anp | NEWSBRAINPORT
