Akava Students, STTK Students and the National Union of University Students in Finland are worried about student indebtedness, and demand action to stop it. Since the cuts that were made in student financial aid in 2017, the overall amount of student loan debt has more than doubled, to a whopping EUR 6.2 billion in January 2024. Students are getting deeper and deeper into debt: in 2022, graduates had an average of EUR 22,660 of student loan debt, which is around three times more than a decade ago.
“The increase in student loan debt has many cumulative effects. For example, starting a family or buying a home may have to be postponed by years due to the large amount of student loan and related financial uncertainty,” says Valtteri Mäyrälä, Chairperson of STTK Students.
The government is making drastic cuts to student income by, for instance, putting the index increases in student financial aid and housing allowance on hold and reducing the housing allowance.
The cuts will be compensated for by increasing the state guarantee for student loans from 650 to 850 euros a month in August. After this, student loan will form about 75 per cent of the financial aid for higher education students.
“These cuts are forcing students to increasingly resort to loans, which increases student indebtedness – a new generation of deeply indebted graduates is already emerging. Many are worried about their ability to pay back the student loan, which may also affect both the decision to study and the choice of field,” points out Aino Halinen, board member at the National Union of University Students in Finland.
The interest rates on student loans have increased to up to 4.5 per cent, resulting in high costs for student loans – something that many students have not been able to prepare for. High interest expenses also increase the risk of taking out a loan.
“The debt accumulated during studies hinders students’ ability to work and has an impact on the type of work they will want to do and can accept in the future. This is particularly true with sectors already suffering from a shortage of skilled labour. I’m afraid that this current trend will only worsen social segregation,” says Pauliina Ryökäs, President of Akava Students.
The only direct way to prevent student indebtedness is increasing the primary student benefits, such as student financial aid. Student loans must also be made safer: the related risk must be reduced by promoting interest rate protection for student loans. The conditions for interest allowance must also be improved.
Mäyrälä, Halinen and Ryökäs agree that more and more graduates are having trouble with paying back their student loans. That is why students must be saved from drowning in debt.
