Loan Consolidation-Pay Off Your Study Debt, or Wait a Little Longer?

Repay the student loan immediately or wait? Students who graduate must start thinking about this. Repaying or not has consequences for the mortgage, among other things.


More study debt in the Netherlands

More study debt in the Netherlands

The number of students with student loans is growing. The average study debt per student also rises. This has everything to do with the new loan system. Since September 2015, students can only receive a student loan in the form of a loan.

The Central Planning Bureau (CPB) expects the average student loan to increase due to the new loan system to 21,000 to 24,000 euros per student. Now this is 19,000 euros.


Spacious conditions for repayment


After the study, the study debt must be repaid to the Education Executive Agency (DUO, formerly IB group). This is possible under broad conditions, including:

  • a start-up period of 2 years in which nothing has to be repaid.
  • ample maximum repayment time: 35 years in the new loan system compared to 15 years in the old loan system.
  • a monthly amount based on income.
  • a low interest rate.

Compare these conditions more often with a regular consumer loan.


Pay off your study debt or not?

Pay off your study debt or not?

The broad condition of a student loan can be very welcome. For graduates at the start of their career, the term amount can have a significant impact on the monthly costs. Even if you have one or more more expensive loans (in red, mail order credit or credit card), it has priority to repay them first.

However, if you can miss a monthly amount, it is advisable to repay your study debt extra. At the end of the term you are then the cheapest. At the moment the interest rate is low, but it can rise during the term. A repaid loan is also a worry less.

The mortgage, however, is the most important reason to immediately start repaying a student loan if possible. For many graduates, buying a home is an important step in the future. The higher your study debt, the less mortgage you can get.

Another reason to pay off. In the event of a marriage, both partners become responsible for the study debt.


Do not redeem, but save or invest

Do not redeem, but save or invest

Making money with your study debt: that sounds good. Instead of paying off your student loan, you can use money that you have left over each month to save or invest. You may therefore achieve more returns than the student loan costs.

Yet this sounds better than it actually is. With the current low interest rates, the return is limited. When investing, you even have a chance of a negative return, so you get deeper into debt. In addition, you must be strong in your shoes to save monthly and not use the accumulated capital for other things.

If you ever want to take out a mortgage, you must immediately put this plan out of your mind. The return that you may achieve with saving or investing is not equal to the amount that you can borrow less because of a high study debt.

Study Debt Costs

Many students opt for a student loan at the Education Executive Agency. This is a relatively cheap form of borrowing with a lower interest rate than the interest rates applied by banks. Moreover, you can take 15 years to pay and you only have to start doing this more than a year after your studies. Because of these benefits you quickly figure out how much this loan costs.

Repay or save – Study debt costs

Repay or save - Study debt costs

You pay interest on your study debt. As long as you do not pay back, EEA will add the calculated interest to the debt. You then also pay interest on this interest. So the amount of your debt rises extra fast. The amount of this interest changes every year. From the moment you start repaying, EEA sets the interest for that moment for 5 years each, so that you know where you stand.

Compared with a loan from the bank, this interest rate is very low on a student loan at EEA. At the bank you pay an average of 6 to 9 percent interest. But make no mistake: the interest from EEA also has a significant impact on costs. Suppose you have a study debt of 10,000 euros in a certain year at 2.2 percent interest.

You pay 220 euros in interest in that year. And because a student loan quickly runs for 20 years, you end up paying a lot of interest. Certainly because you do not initially start paying off, but pay off the interest. Only when you have paid the interest do you actually start paying off the student loan. And even then the interest continues.

Pay off your study debt or not?

Pay off your study debt or not?

You might think that it would actually be cheaper to keep saving, especially if the savings interest is higher than the interest you pay on the study debt. But keep in mind that you also pay interest on that interest, which means that you actually pay more interest than just the given interest rate at that time.

Nevertheless, saving instead of paying off the student loan has a number of advantages:

  • Sometimes a savings account indeed yields more than the debt costs.
  • If paying off the student loan means that you are going to borrow from the bank to buy a car, for example, you are more expensive. You then better choose to use your savings for the purchase of the car.
  • The part of the study debt higher than 3,000 euros or 6,000 if you have a tax partner is deductible in box 3. So if you have assets of more than 30,360 euros or 60,720 euros if you have a tax partner, you save capital gains tax.
  • You need a financial buffer on your savings account to be able to pay unforeseen costs. It is better not to use this buffer to pay off your student loan.

The most important weighting factors from the list above are the financial buffer and the major expenditures in the near future. Paying off extra on your study debt makes no sense if this means that you have to borrow from the bank for other things or go red on your checking account. This costs much more than the student loan. But if you do not need the money for other things, you make a calculation for yourself to determine what is more beneficial for you.

Additional repayment of student loan mortgage

Additional repayment of student loan mortgage

The bank takes your study debt into account when calculating your maximum mortgage. With a student loan you can therefore take out a lower mortgage than without a student loan. Although the study debt counts less heavily than other debts and loans, it quickly saves tens of thousands of euros on your maximum mortgage. Even if your partner has no study debt, you may take out a lower mortgage.

To be able to take out a higher mortgage, it is certainly wise to pay off your study debt.

Ready File Versus Ready-made Loan

Being in a situation of banking prohibition is not obvious. It is really difficult to get a favorable solution for granting credit in conventional banking institutions. However, there are solutions to obtain financing. Being ‘banking prohibited’ implies being filed with the National Bank in Belgium.

When you see a credit application, the lender is obliged to consult this feature database, if you are registered, you will be appreciated as a risky client. Even if legally speaking, being banned is not allowed. not equivalent to being banned from credit, the decision is at the whim of the financial institution. Vipa works with financial organizations specializing in credit for banned banking.

Do not refund your credit for more than two monthly installments


Will necessarily require your registration with the National Bank in Belgium. The consequences can be unfortunate. We are at your disposal for any further information.Show at the National Bank in Belgium Did you know that: n Each credit subscribed must be registered with the Central Credit to individuals by your praetor organization. 

The Central Office for Personal Credit is tasked with combating over-indebtedness. If you fail to pay your premium for 3 consecutive months, Your lending organization has the legal obligation to terminate your credit or loan agreement with the National Bank in Belgium which will proceed to your registration. When you are registered with the National Bank in Belgium, your file reaches the litigation department of your lending agency that will try to find a solution with you to recover your money or by nature, will initiate legal proceedings that may lead to the recovery of the balance of credit unpaid on your property.

This may involve a seizure of your property and a public sale

This may involve a seizure of your property and a public sale

If your credit is not cleared, you remain registered with the National Bank in Belgium with the consequence that no credit organization (bank or broker) will be able to lend you any more money. You can not borrow anymore. Once you have settled your credit, the lending group has the legal constraint to ask the National Bank in Belgium to cancel your registration. n You will have to wait 15 months after delisting to be able to make a new loan or apply for a new loan. Being stuck is therefore a delicate situation. However the European People’s Credit can offer you solutions to get out of this embarrassing situation:

Credit agency for a person in charge of internal search for a credit organization for a person? But, do you already know how long this nature of payment will be registered at the National Bank in Belgium? Today, you can find a personal credit agency and, under certain conditions, benefit from the ability to borrow money again, despite your creation of an account at the National Bank in Belgium .

But are you still registered? How long do you appear there? As part of the normal course of a loan, your phone numbers are erased three months and 8 days after your last refund. once a payment incident occurs, they can be kept for up to 10 years. However, if regularization occurs, with an update of loan maturities, this period is often limited to a single year. To be more informed, all you have to do is contact the NBB during opening hours.

Banking institutions and credit institutions have the legal obligation

Banking institutions and credit institutions have the legal obligation

To register each of their credits with the National Bank in a file called the ‘central credits’. However, listing at the National Bank in Belgium is called ‘harmful’ when it occurs due to significant delays in one or more credit (s). These registrations are intended to protect the prospect against the risk of over-indebtedness.

A “harmful” listing among the list of offers still present at the National Bank in Belgium implies that it will, in general, no longer possible to obtain a new credit.If you are stuck at the National Bank in Belgium Any credit application made at Proxi Finances will be analyzed differently according to the following cases:

The credit has been regularized (that is to say, compensated): the registration is still a year (after the repayment date of the credit) from the credit center of the National Bank. However, in certain situations, Proxi Finances will be able to process the file and give it to its partners.

The credit has not been regularized (that is to say refunded) and you are OWNER: there are solutions of centralization credit with mortgage registration. In some cases, which depends mainly on the outstanding amount of outstanding credits and the existing value of your property, Proxi Finances can forward the file to its partners