In a bid to help people who struggle to get into work or education, the Netherlands’ capital city of Amsterdam is taking over the debts of young adults to free them from the stresses of being under financial pressure.
The progressive move follows a growth in borrowing among young adults in the Netherlands – a trend that can be seen all over Europe, including the UK.
As a trial, the municipal credit bank has decided to start negotiations with creditors to buy the debts from them. People involved with the scheme will then be issued with a loan to repay within their means.
Creditors will also receive a €750 (£640 / $830) incentive to pass debts onto the municipality’s bank, with young people being given the chance for more of their debt to be cancelled if they go on to training or educational courses.
Amsterdam’s deputy mayor, Marjolein Moorman said: “Debts cause a lot of stress. And in the case of young people, debts often determine their future.
“The majority of these young people started out in arrears and, due to bad luck or ignorance, found themselves in a situation where they could not get out without help. That is why we are now going to help them so that they can make a new start.”
Set to start in February, the debt transfer project will give each person who takes part in the trial a coach who will help them to make a ‘guidance plan’. The city says that young people who don’t have a stable income can find it difficult to get on top of their finances to keep up with repayments.
Average student debt
More than a third of people in Amsterdam aged between 18 and 34 have debts, with the average student debt now reaching €13,700 (£11,700 / $15,200). The amount of individuals with student debt has risen by 388,000 and has now reached 1.4 million.
The average student loan debt alone in the UK is £35,950 ($46,800) while the average unsecured debt in UK households is £13,799 ($16,200).
StepChange, a UK based charity that gives advice to people who are struggling with debt, says that among its clients, the 18-24 age group is less likely to have a credit card (the most common kind of debt) than any other age group, yet the 25-39 age group is the most likely, with 69 percent of them having one open at the time they get in contact with the organisation.