A merry-go-round of incentives for working students

The government budget sessions for the next year have just been completed. Among the decisions made is to temporarily raise the limit on the amount of income that students can earn without losing their entitlement to student financial aid. The decision will come into effect only for 2022. The increase was a necessary measure, one which SYL had directly proposed to the Permanent Secretary of the Ministry of Finance, Juha Majanen, before the government budget sessions as one solution to the ongoing labour shortage.

However, the decision to increase the limit for only one year doesn’t make much sense. It’s as clear as day that it should be permanent. The previous actual increase in student income limits was made in 2008, and since then income levels have lagged behind the upward trend in income development in the country overall by about 25 per cent. At the same time, the number of decisions made to recover student financial aid from students due to their exceeding the income ceiling was already close to the 2007 highs, to almost 50,000 a year.

For students, an increase in the level of permissible earnings for just one year is likely to cause problems. To be entitled to student financial aid during the academic year, students must meet a minimum level in the number of study credits earned in the academic year (August to July). At the same time, they must not exceed a certain income level for the full calendar year. The rise and fall in the middle of the academic year in the income level during the year and the requirement for a minimum number of study credits for the academic year creates a merry-go-round of incentives. A hard-working student may have to resort to the tactic of scheduling their salary income, number of study credits earned, and number of months of student financial aid claimed for those six-month periods in which the requirement in order to earn the minimum number of credits, and to the extent that the income limit allows.

This sounds complicated, and it is.

And does it serve it purpose? Receiving student financial aid should not be dependent on tactics, but on real need.

The reason that has been given for limiting the change to just one year is that it will allow the actual effect of the increase in income limits to be assessed before any decision is made as to whether they should be implemented for a longer period. This rationale isn’t very convincing. Statistics on taxation and student financial aid for 2022 will not be available until 2023, when the increase will no longer be in force. It will not be possible to assess its impact unless the decision on whether to continue it is made in the autumn of 2022.

As with any other decisions relating to benefits, this one should be made with a view to the longer term. Unfortunately, student financial aid has been subjected to a great many changes over the years due to political about-turns and other ups and downs in society.

Although raising income limits is a good thing, even if only for a limited period, it would be important for decisions on student financial aid to be made with less of a short-term view, and for decision-makers to understand how much of an impact they have on students’ lives. A total of 281,349 students received student financial aid during the academic year 2019–2020, and for many this was their primary source of income.


Sakari Tuomisto

Social policy adviser

Sakari Tuomisto
Social Policy Adviser (student finances, housing), on parental leave

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