The impact of student loan reforms on students'' enrolment and housing decisions: evidence from the Netherlands

Ruben van Gaalen, University of Amsterdam
Lonneke van den Berg, University of Amsterdam

In 2015, the Dutch government implemented reforms in the student loan system in the Netherlands. In the former system, all Dutch students received a monthly allowance that covered the tuition fee, and (some of) the housing costs if the student had left home. The reforms entailed the abolishment of this monthly allowance for all students – only students from the lowest income group remained eligible for a monthly allowance, and this allowance no longer covered housing costs if the student left home. The main goal of this research is to examine to what extent these reforms have impacted students’ enrolment and housing decisions, and whether this impact differs by socioeconomic background. A guiding hypothesis is that these reforms result in an increased call for intergenerational support through a pro-longed stay in the parental home. I analyze the impact of the reforms using register data from Statistics Netherlands for 10 year-specific cohorts that became eligible for higher education between 2007 and 2016. Using event-history analyses, young adults from the cohorts before the reforms are compared to young adults from the cohorts after the reforms in the probability of study enrolment and leaving home. The findings show little impact of the student loan reforms on students’ enrolment decision. However, the probability that students leave home is substantially reduced after the reforms. This finding supports the hypothesis that the reforms increase the reliance on family for intergenerational support.

The impact of student loan reforms onstudents’ enrolment and housing decisions: evidence from the Netherlands


Lonnekevan den Berg

Universityof Amsterdam


Extended abstract

In 2015, the Dutch government reformed the studentfinancial aid system in the Netherlands. In the former system, all studentsreceived a monthly allowance to cover the tuition fee. In addition, studentsreceived a supplementary allowance if the income of their parents was low, andif they had left the parental home. In the new system, only students from thelowest income group receive a monthly allowance. This monthly allowance foryoung adults from lower income groups no longer covers housing costs; theallowance is not higher if students have left the parental home. In this study,I will examine to what extent these student loan reforms have impacted studentenrolment and housing decisions in the Netherlands. Have these reformsincreased the call for intergenerational support through pro-longed stays inthe parental home? Moreover, my goal is to examine to what extent this impactdiffers by socioeconomic background. 

The reforms could, first of all, have impact students’enrolment decisions. The reforms entail an increase in the financial costs ofstudying. This might especially impact students from lower socioeconomicbackground. These students and their parents often have less knowledge aboutthe costs and benefits of studying; they overestimate the costs andunderestimate the benefits (Vossensteijn, 2005; Grodsky & Jones, 2006). Moreover,they are more often risk averse (Vossenstijn, 2005; Callender & Jackson,2008; Oostenbeek & Van den Broek, 2005). As the financial risk of studyinghas increased, they might be less likely to enroll.

Secondly, the reforms in the financial aid systemmight also affect students’ decision to leave home. Young adults leave homewhen the benefits of leaving outweigh the costs of leaving (e.g., DeJong-Gierveld, Liefbroer, Beekink, 1991; Iacovou, 2010). The reforms entail anincrease in the costs of leaving the parental home, as students used to get ahigher monthly allowance in the former system if they had left the parentalhome. The reforms might especially affect the decision to leave the parentalhome of students whose parents financial resources are limited, because theirparents cannot support them financially and the relative costs of living independentlyare higher for them.

I examine student enrolment and leaving home withDutch register data from Statistics Netherlands of 10 year-specific cohorts ofyouth who graduated between 2007 and 2016 from high school. The enrolment andhousing decisions of young adults from cohorts that studied before the reformsare compared to cohorts that studied after the reforms in event-historyanalyses. The event-history analyses cover the first two academic years afterthey graduated high school.

The results based on linear probability models show nosignificant effects of the implementation of the student loan reforms in 2015on student enrolment in university. However, there is a slight reduction in thepercentage of eligible students that enroll in applied university. This impactis stronger for students whose parents are in the lowest income group. Thetrend of enrolment in applied university by parental income can be seen inFigure 1.

Figure 1: Enrolment in applied university

Data: Statistics Netherlands, owncalculations

The results for leaving home show that the trend inleaving home was strongly impacted by the implementation of the student loanreforms in 2015. Both young adults at university and applied university aresignificantly less likely to leave the parental home after the reforms. Figure2 shows the trend in leaving home for university students. The results suggestthat especially the highest income group experienced a decrease in thelikelihood to leave the parental home. 

Figure 2: Trend in leaving home among universitystudents

Data: Statistics Netherlands, owncalculations


Callender, C. and J. Jackson (2005). Does the fear ofdebts deter students from higher education? Journal of social policy,vol. 34, no. 4. p. 509-540.

Iacovou, M.(2010). Leaving home: Independence, togetherness and income.Advances inLife-Course Research, vol. 15, no. 4, p. 147-160.

Jong-Gierveld, J. de, A. C. Liefbroer enE. Beekink (1991). The Effect of Parental Resources onPatterns of Leaving Home among Young Adults in the Netherlands. EuropeanSociological Review, vol. 7, no.1, p. 55-71.

Grodsky, E., and M. T. Jones (2007). Real and imaginedbarriers to college entry: Perceptions of costs. Social Science Research, vol.36, p. 745-766.

Oosterbeek, H. and D. Webbink (1995). Enrolment inhigher education in the Netherlands. The Economist, 143, p. 367-380.

Vossensteijn, J. (2005).Perceptions of studentprice-responsiveness. A behavioural economics exploration of the relationshipsbetween socio-economic status, perceptions of financial incentives and studentchoice. Enschede: Universiteit Twente/Centre for Higher Education PolicyStudies (Dissertation).


Presented in Session 1131: Life Course