Students participated in a performative demonstration outside a Kela office in Kamppi, Helsinki, on 3 November 2023. YLE has reported that the total amount of overdue student loan repayments is on track to up to triple from last year. (Emmi Korhonen – Lehtikuva)


THE SOCIAL INSURANCE INSTITUTION of Finland (Kela) is on course to collect a record amount in overdue student loan repayments this year – possibly up to three times as much as last year, according to YLE.

The dramatic change is the result of recent amendments to the student support system on the one hand and the inflationary and high-interest-rate environment on the other.

YLE on Sunday revealed that Finns have have failed to make 72 million euros worth of student loan repayments this year. The full-year total is projected to rise to at least 80 million euros, about three to four times higher than the longer-term average.

“That’s almost two to three times more than last year. Guarantor liability costs have therefore risen considerably this year,” commented Mari Jaakkola, a lawyer at Kela.

The repayment difficulties of students are hardly a surprise, Joonas Soukkio, the chairperson of the National Union of Students in Finnish Universities of Applied Sciences (SAMOK), stated to the public broadcasting company on Monday.

“Now that the student loan stock has more than doubled in a couple of years, we knew to expect an increase in various kinds of problems. Because interest rates have started to rise and prices in general have risen, it’s no wonder that people are struggling with their student loan repayments and interest costs,” he said.

Lotta Leinonen, the chairperson of the National Union of University Students in Finland (SYL), added that students were long encouraged to take out student loans because they were “free”.

Prime Minister Petteri Orpo’s (NCP) government proposed at the beginning of the month that the monthly limit on student loan drawdowns be raised from 650 to 850 euros, a move that would mark the second 200-euro increase since 2017.

The previous increase was implemented as part of a reform that shifted the focus of the student support system toward borrowing.

“We’re very critical about raising the loan amount. People are already struggling to repay their loans and interest costs. Making student financial support even more loan-based isn’t good in this environment,” said Soukkio. “We hope that the government will re-examine once more whether the freezes in student financial aid and cuts in housing allowance are necessary.”

Also Leinonen cautioned that the newly announced policy measures would likely increase borrowing by students.

“You’re already seeing that the majority of people are taking out student loans to cope with the day-to-day life: for food, rent and clothes – the basic necessities you need to live,” she highlighted to the public broadcaster.

Together the policy measures and existing difficulties suggest the coming years could be tough for students.

“This does complicate the life of many students, especially those who can’t work as much while studying or those who are struggling to cope and maintain their mental well-being,” said Soukkio.

Leinonen added that such difficulties can undermine the ability of students to focus on their studies, resulting in fewer students graduating in time.

The government has stressed repeatedly that its cuts are targeted at segments of the population that, in general, are best equipped to improve their position by finding employment. Soukkio, though, reminded that not all students are pursuing a degree in highly paid fields.

“Wages in social and health care, early-childhood education, social services and culture aren’t high,” he said.

Aleksi Teivainen – HT