In a landmark decision, the Dutch government has committed to refunding over 10,000 students who were wrongfully flagged for student finance fraud by an algorithm developed by the Education Executive Agency (DUO). The decision follows widespread criticism after an investigation revealed that the system was discriminatory. The algorithm targeted students based on arbitrary risk factors, which disproportionately impacted those from immigrant backgrounds, particularly individuals of Turkish and Moroccan descent. This announcement comes amid increasing scrutiny of DUO’s use of data-driven algorithms and broader concerns about ethnic profiling within government institutions.
Minister of Education Eppo Bruins has allocated 61 million euros for the refund process, including 47 million euros for direct reimbursements and an additional 14 million euros for implementation. “We want to prevent students from being caught up in legal battles,” Bruins stated, emphasizing that refunds will be issued regardless of the fraud findings due to the systemic biases present in the investigatory methods.
The fraud detection system, introduced by DUO in 2012, flagged students based on factors such as age, educational level, and the distance from their parents’ residence. These criteria were shown to unfairly target ethnically diverse students. A June 2024 investigation by Dutch news outlets NOS and Investico revealed that among 375 students flagged for fraud, 97 percent came from ethnically diverse backgrounds. Although DUO initially denied any intentional bias, the agency later admitted that non-Dutch students were overrepresented in the checks, attributing this to systemic flaws rather than intentional racial profiling.
Further revelations came from an independent report published by PricewaterhouseCoopers (PwC) in March 2024. The report confirmed that the algorithm indirectly discriminated against migrant students, with cultural background playing a role in the fraud checks. Factors such as the distance to students’ parents’ residence disproportionately affected immigrant families, where students were less likely to live independently in shared student housing. Students in secondary vocational education (MBO) were also more likely to be targeted, especially during a period when non-resident grants were only available to this group.
Minister Bruins’ announcement marks a significant shift in policy following a wave of criticism from various watchdog organizations. The Dutch Data Protection Authority (AP), which launched an investigation into DUO in July 2023, had previously warned that Dutch government agencies continued to rely on flawed algorithms that compromised citizens’ rights. “The government’s thirst for data seems insatiable,” said AP Chairman Aleid Wolfsen, who cautioned that the unregulated use of such data could lead to serious consequences for individuals, as demonstrated in the childcare benefits scandal.
A series of investigations, both internal and external, have pointed to the systemic failures of DUO’s fraud detection system. An initial warning about potential ethnic profiling emerged in 2020, when attorney Rudolf van der Ham observed that a majority of DUO’s fraud suspects had non-Dutch surnames. Despite this, DUO continued to rely on its algorithm, maintaining that it was based on “objective (behavioral) characteristics.”
In response to the growing backlash, Minister Bruins ordered the suspension of the discriminatory algorithm in July 2023 and replaced it with a random-sampling-based fraud detection system. However, organizations like Amnesty International continue to raise concerns that the risk of ethnic profiling remains embedded within government agencies. A report from Amnesty International in March 2024 criticized the Dutch government for not implementing sufficient safeguards against ethnic profiling, noting that “government organizations have broad powers to monitor individuals,” a practice that “opens the door to abuse of power and ethnic profiling.”
Education Minister Robbert Dijkgraaf, who had previously assessed DUO’s methods, expressed concerns about unintentional discrimination. “As a government, we’ve become particularly alert to this issue following the benefits scandal,” Dijkgraaf said, referring to the scandal that led to the resignation of Prime Minister Mark Rutte’s third cabinet. Dijkgraaf’s ministry has since commissioned independent agencies to audit DUO’s practices.
Amid growing scrutiny, DUO has pledged to revise its data practices and fraud detection methods. The agency has expressed “deep regret” over the findings and has committed to working transparently with oversight bodies moving forward.
SJN
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