Fact: The interest rate has never been so low
Today, around 1.8 million people have student loans. The interest rate for student loans in 2022 is 0 percent. Historically, the interest rate has never been this low.
For driving license loans and for home equipment loans, the interest rate is slightly higher, at 1.5 percent. For refunds, the interest rate is 2.03 percent over the next year, a reduction from 2021.
The interest rate for student loans is calculated on the average borrowing cost for the state over the last three calendar years. The state also subsidizes the interest that the individual pays with 30 percent.
Source: CSN
If it feels like the increased interest costs are already taking a toll on your wallet, it’s time to call for more interest rate hikes.
The interest rate on the student loan will also increase next year, according to CSN’s latest forecast. Something that will make the previously very favorable interest rate on the student loan – which this year is at a historically low zero percent – significantly higher.
“If the interest rate is raised, so is the interest rate on the student loans,” says Jan Söderholm, who is head of the finance department at CSN.
But how large an interest rate increase can you then expect? According to CSN, the total interest rate could end up at 0.64 percent, from today’s zero interest rate. For a former student with an average debt, i.e. of SEK 166,000, this would then mean an increase in interest costs of SEK 88 per month or just over a thousand Swedish kronor per year.
Must cover losses
And there are two different parts that will contribute to the increase.
The first thing that will contribute to the increase is a new interest calculation model for the student loans taken out after 1989. The government has proposed that the interest rate should be increased by about 0.5 percentage points starting in 2023 to cover the credit losses of those who do not repay their CSN loan.
Today, therefore, the state is responsible for the costs of the student loans that are not repaid, and the government now wants to change that. The decision on this is expected to be made in connection with the budget bill this autumn, according to Jan Söderholm.
Raise the forecast
Then there are also annual adjustments when it comes to the interest on the student loan, which is linked to the government’s loan cost over the last three years. The government decides on these.
According to CSN’s latest forecast, this increase will account for 0.14 percentage points of the interest rate increase, including the 30 percent government subsidy on student loan interest rates.
— The base rate is linked to the market rate and is a calculation of the government’s borrowing cost. So if you combine these two (the new interest calculation model that is being introduced and the increase in the basic interest ed. note) you get the interest that will affect the customer, says Jan Söderholm.
CSN’s forecast has been adjusted upwards since the last forecast from April, when the base rate was instead calculated at 0.06 percent including subsidy.