Imagine a situation where you spend practically 24 hours a day in a small single-room apartment. You study remotely, sleep, eat, spend time with friends virtually, and spend your free time in the exact same place. Day in, day out, week after week. At the same time, your financial situation is in constant crisis. You are exhausted. You have an average of €6.60 a day for food, and even so your student grant months are being used up all the time. Not only that, but the amount of debt in the form of student loans is growing rapidly.
No, this is not a made-up horror story. This is real life for many students.
The reality after the cuts
The median income of students has fallen by more than €200 after the cuts that were made to the student grant in 2017. In the same reforms, student loans were given significantly more weight in the student financial support system. More than two out of three students cite the cost of living as a reason for taking out a student loan. In January 2021, more student loans were taken out than ever before – a total of €327 million. Since 2017, the overall amount of student loans has almost doubled.
Without a job or a loan, students’ monthly incomes are well below the low-income threshold. In Finland, the low-income threshold in 2019 was approximately €1,280 per month. In the same year, the median disposable income of university students was €859 per month.
In fact, even with a loan, conditional study grant and a maximum household-specific housing allowance, students can barely rise above the low-income threshold. The monthly student grant of €252.76, the maximum loan amount of €650 and the maximum amount of housing allowance (in municipal group 1) of €416.80 make a total of approximately €1,320 per month.
This is only €40 above the low-income threshold – and these are the best-case scenarios.
The only ways to exceed the low-income threshold are to find work, draw on savings, or, for example, to receive extensive financial support from parents. Students vary a great deal in the availability of these opportunities.
Working during studies is generally favoured and beneficial in many ways for both the individual and society, and students should be rewarded for their hard work.
However, the problem with the current system is that due to insufficient financial support and the chronic deficit in their financial situation, students are in effect forced to either take on debt or work to get by. Every student has different resources, and this system is not fair to everyone. When times are tough, the less fortunate face serious difficulties.
Insufficient student grant months and an inflexible system
A key difficulty is the inadequacy of the monthly student grant. With the 2014 and 2017 cuts, the number of student grant months paid for 300 study credits for bachelor’s and master’s degrees was reduced from 55 to 48. This amount allows for a maximum of five years and three months of monthly grant-supported study if the student receives the grant for nine months of the year.
The maximum grant-supported period for a bachelor’s degree is 30 months, and a further 21 months for a master’s degree after a bachelor’s degree has been completed. However, the maximum total number of study grant months available is 48. The study grant months must therefore be divided in this way between the two degrees, and there is only three months of flexibility between the degrees.
Due to the inadequacy of the number of student grant months and the number of grant months divided between the two degrees, thousands of students drop out of the grant system each year, both at bachelor’s level (from 2,000 to 7,000 students per year) and master’s level (4,000 to 6,000 students per year). This is hardly a desirable state of affairs, since when a student drops out of the support system it becomes significantly more difficult to complete their degree. In order to guarantee their livelihood, students are in practice forced to get a job, or alternatively to apply for income support, for example (which requires that the maximum amount of student loan has first been taken out).
The inadequate number of student grant months therefore makes it considerably harder for thousands of students to graduate. Moreover, in order for a student to even get to the point where the number of grant months runs out too early, they must actively study and make progress in their studies, as a precondition for the student grant is the completion of at least five study credits for each month of the grant. Therefore, if all 48 grant months have been used up, the student will have already earned at least 240 study credits.
The inflexible system does not offer students leeway for different life situations. The minimum annual credit requirement of 20 credits completely excludes from the scope of support those who can obtain only a smaller number of credits in a year, for example due to exhaustion, illness or family leave, or limited study time due to the demands of paid work. A requirement of five study credits per month of student grant should be enough on its own.
The system also does not encourage students who are doing well in their studies. The income limits for the student grant in Finland are very low compared to the other Nordic countries, and calculating income, refunding paid grants and incurring penalties for overpaid student grants create pressure to be passive, and also create an incentive trap close to the income threshold. According to a report by the Labour Institute for Economic Research, raising the income threshold by 50 per cent to €18,000 would result in a net positive increase of €5.9 million for the exchequer on an annual basis. Raising income limits would promote employment.
The effects of the Covid-19 crisis
The Covid-19 pandemic has had a significant impact on student livelihoods. Opportunities to make up for the low levels of support through paid work have narrowed, as many students have lost their additional income due to layoffs or temporary layoffs. The number of summer jobs on offer for 2020 was about one-quarter less than in previous years, and the situation for the summer of 2021 does not seem much better. Internships have also been more difficult to find than usual.
Insufficient student grants and added pressure to take on a student loan keeps students below the poverty line. Students’ social security is lower than for any other group in Finland.
The amount paid through student grants is also low compared to the other Nordic countries.
Drawing comparisons between different systems and forms of support is not easy, but in practice the Finnish level of support was already the lowest in the Nordic countries back in 2014, before the cuts. Although the increase in the maximum amount of the student loan and the transfer of students to the general housing allowance system have brought improvements, it is nonetheless clear that the overall situation for Finnish students has not improved, at least on account of the cuts in student grants and increased student debt.
What should be done?
Investing in students and education, especially during the ongoing Covid-19 crisis, would be profitable in the longer term, and is even essential, even if it entails additional costs in the short term.
The Ministry of Education and Culture has also acknowledged that the financial support for students is inadequate. Among other things, the share of financial support accounted for by the student grant and the number of study support months would require changes, according to consulting official Virpi Hiltunen of the Ministry of Education and Culture.
“What ultimately matters is the political will to set about correcting the situation,” Hiltunen commented in an article published by Yle on 15 March 2021.
That is why we want to see wise decisions and a long-term outlook on the part of decision-makers. It is above all a matter of political value choices.
We need lasting solutions to this situation and to structural problems. Temporary relief alone is not enough.
If decision-makers leave students – the creators of future prosperity in the welfare state – to their own devices in this situation, there is a risk that things will deteriorate further in the future. It is now high time for a student-friendly government to live up to expectations and invest in improving the poor social security situation for students – as four of the five parties in government emphatically assured they would do before the general election of 2019!
- The student grant must be increased to €335 per month – that is, to the level before the cuts made in 2017.
- The number of months for which the student grant can be paid must be increased to 55, and the separation of the number of grant months into degree levels must be removed.
- The requirement of at least 20 study credits per academic year must also be removed.
- The student income threshold for the student grant must be increased by 50 per cent.
Immediate action is needed to handle the problems facing students in terms of livelihood. Students must not be the group left to cope with insufficient means of making a living and indebtedness during this crisis.Without improvements to the situation, the future looks grim. And the plight of students left alone in the future may be worse than we dare imagine.