Continuing your studies after secondary school is a sensible but also expensive step in a human life. First, every student in both vocational and higher education must pay tuition fees to the educational institution where he or she is following a course. On an annual basis, this currently amounts to more than 1500 US dollars. And that's just the beginning. For example, health insurance must also be taken out, study books and other study supplies must be purchased and the room rent must be Demorei every month. Add the cost of living to that, and chances are that the student grant he or she receives is not sufficient for the average student. This article provides helpful information about student borrowing opportunities.
One step too far?
The Ministry of Education has conducted research into student borrowing behavior. This research shows that students generally have regular overdrafts on their bank account and do not find this a problem. However, taking out a loan goes a step further and they prefer not to do that. A student loan is only taken out if there is really no other solution, while overdrafts are proportionately much more expensive. Nevertheless, there is a tendency for students to take out a loan more quickly in recent years. For example, the number of students who have taken out a (small) loan has increased by more than 50% in the past 3 years.
Where can students borrow money?
At the start of the study, students receive a basic and possibly additional grant from the Informatie Beheer Groep. If this is not sufficient to cover all costs, a loan must be taken out.
Students generally borrow in two different forms:
Borrow money from the same IB group.
In addition to student finance, students can take out a so-called student loan at this government institution. This monthly payment can be obtained at a very favorable interest rate and the payment does not start until after the study. Repayments may also be accelerated without penalty if necessary. The disadvantage is that it is therefore a monthly supplement that is subject to a maximum. So no (large) amount is released in one go.
Borrow money from commercial institutions.
Banks and other lenders often offer special rates and / or packages for students. However, the interest rate on these loans is on average a few percent higher than that of the Informatie Beheer Groep . After the study, the loan is often converted into a revolving credit with an even higher interest rate. However, there is also an advantage: it is not a monthly benefit. An amount is released in one go and for larger expenses for which saving is not possible, this is of course a requirement.
In view of the large differences between these two types of institutions, it is therefore important that a proper assessment is made before taking out a loan. If a large amount is not necessary, a loan through the Information Management Group may be a good and cheap alternative for the commercial institutions.
In addition to obtaining the basic grant, there are various loan options from financial institutions, but a common solution is that the parents contribute to the study costs. The great advantage of these private contributions is that they are deductible up to a certain amount from the taxable income of the paying parent. Here you can read more about the tax deductibility, study costs paid by the parents and training costs paid yourself.
Deductible study costs.
Parents can deduct the cost of living for the children up to the age of 30 from the tax. This maintenance therefore also includes tuition fees, textbooks or training costs. It takes a lot before the parents have reached the maximum deductible amount and all costs must be demonstrated. In addition, the student must live away from home and be largely financially dependent on the parents. He may not earn additional money or borrow money from the IB Group . Another option is that the parents make a tax-free donation to the student every year. Once only, that amount itself can be drastically higher. Many tax benefits can also be obtained with an interest-free loan from parents to students.
Deductibility of training costs.
Under the heading of training costs, all expenses related to a training or study with which an income can be acquired later through work. The expenditure must be directly related to the relevant study program or field of study. The training costs are deductible if the training that is followed is necessary to be able to practice a suitable profession after completion. In addition, the study must serve a purpose, such as improving the financial-economic or social position or maintaining professional knowledge and skills. A maximum has been set for the deduction of training costs, which is income-related.
The deductible items include study and tuition fees, study materials such as books, readers and even computer costs. However, note the following. The deductible item on computer equipment can be submitted if it meets a number of requirements. The computer must be used for study purposes of the current study, it must have been purchased by the taxpayer and the purchase price must be average. The depreciation amount can then be deducted from the tax in these situations. Overall, financial contributions from the parents in their child's study can still be a fairly attractive business, provided both parties can find an appropriate agreement.