The Dutch government plans to replace the current study grant system by loan facilities. Right now, all Dutch and some EU citizens are entitled to a monthly grant of around €266 if they attend university. In the future, students will have to finance their studies by borrowing money from the government. This represents a major policy turnaround shifting the burden of higher education financing from the public sector to the individual student.
From student loans to tuition fee hikes
Abroad, similar reforms were implemented in the past with wide ranging consequences. Ever since taking office in 2010, British Prime Minister David Cameron has been driving his conservative liberal coalition in a similar direction by introducing a "study tax" and widening loan facilities. For English students this means that from 2012 on they have to pay yearly tuition fees of up to £9.000 (€10,170).
The European Commission too has recently found a liking in the loan idea. Plans are being worked out to ready a fund worth €100 million from which EU citizens can borrow money to complete a Master education abroad. Allan Päll, leader of the European Student Union (ESU), criticized these plans stating that they would create "tomorrow's indebted generation of graduates".
"We need to admit that rising youth unemployment and an increasing graduate debt burden might become an explosive mix, leading to greater social divisions between young and old," Päll commented in an opinion article.
Champion of student loans worldwide are the United States. There, the total amount of student loans outstanding has recently surpassed the $1 trillion mark. Last year, experts from the rating agency Moody's already warned that the student loan market might be the next financial bubble to burst. President Barack Obama himself addressed this issue in his State of the Union speech. At the moment, he is fighting off Republican efforts to double student loan interest rates.