WG for abolishing student loan scheme, rising grants

A ministerial working group in its report proposed to revise or abolish the student loan compensation scheme and increase the size of study grants.

The working group, which was formed to assess the current situation in student financial aid and key development needs in this regard on Thursday submitted its proposals to Minister of Youth, Sport and Physical Activity Sandra Bergqvist, said the Ministry of Education and Culture in a press release.

The working group reviewed the current situation in student financial aid and necessary key developments in the student financial aid system.

Needs for development that were deemed essential include reinstating indexation and restructuring interest assistance and loan granting practices to improve the security of student loans.

However, the most significant and meaningful changes would be to increase the size of study grants, to revise or abolish the student loan compensation scheme, and proposals related to student financial aid periods.

In addition, the nomenclature in the student financial aid system should be made clearer and the implementation of the system made easier. Impact assessments should be prepared as part of further preparation.

“The working group assessed the current situation in student financial aid extensively and presented a number of essential proposals for development that will be addressed in the course of the spring,” said Bergqvist.

Student financial aid in upper secondary education will focus on sources of income and incentives for students within the scope of compulsory education

The size of the study grants will be readjusted using index adjustments and the level of the grants will be raised to improve the adequacy of the grants. The income thresholds of the parents of students will be tied to the index and raised. Students in low-income families will continue to be guaranteed the right to student financial aid.

The central government guarantee is granted for student loans to students who no longer live at home regardless of their age, but not to minors living with their parents. The aim is to reduce the number of young students with student loans.

Maximum duration of student financial aid for studies other than compulsory education is granted for a maximum of 50 months. This makes it possible to complete an upper secondary qualification after general upper secondary school or to use student financial aid in adulthood.

The housing supplement covers a maximum of 80 per cent of overall housing cost thresholds per municipality group (EUR 296/248 or EUR 216 per month) as of 1 August 2025. These euro sums for housing supplements should be indexed to ensure adequate financial support when housing costs rise.

“Student financial aid is the primary form of financial support for full-time students. Its purpose is to secure a source of income for students during their studies. So, when the support systems are being reviewed, the emphasis should be on reinforcing the elements that impact studies, such as study grants, housing supplements and government guarantees for student loans. Moreover, if the system of student financial aid aims to encourage students to complete a qualification or degree within the normative time, the terms of student financial aid must also support this objective. When making further preparations, it is necessary to assess whether special incentives are required,” said Virpi Hiltunen, Ministerial Adviser, chair of the working group.