Student loan drawdowns record high in January

Drawdowns of student loans amounted to EUR 285 million in January this year, which is EUR 15 million more than in the corresponding period a year earlier and also more than ever before, according to Bank of Finland.

The average interest rate on student loans drawn down in January 2019 was 0.48%. Of the new loans, 82% were linked to Euribor rates and 18% to prime rates. The average interest rate on Euribor-linked loans was 0.39%, while that on prime rate-linked loans was 0.91%. Student loans are linked to banks’ own reference rates considerably more often than other household loans.

The stock of student loans reached a new record at the end of January 2019, totalling EUR 3.6 billion. The student loan stock has grown at a brisk pace since the student financial aid reform of August 2017.

Since the reform, the stock has expanded by as much as EUR 1.1 bn. In January 2019, the growth rate of the stock was 20.2%.

Growth in the student loan stock does not stem solely from higher loan amounts granted as a result of the student financial aid reform. The number of persons taking out a student loan has also increased, which has been reflected in recent years as a notable increase in the total number of persons with outstanding student loan debt.

According to the statistics of the Social Insurance Institution of Finland (Kela), there were already over 400,000 persons with outstanding student loan debt in the academic year 2017–2018, as opposed to 354,735 two years earlier.