Kela tries to recover 43.3 million euros in overpayments to students

Around 312,000 students received financial aid from Kela in 2017. Of them, some 40,000 had income in excess of the annual income limit specified in the Act on Student Financial Aid, according to information published by the Finnish Social Security authority (Kela).

Kela explains that has sent out preliminary decisions on the recovery of overpaid financial aid to the affected students. The average amount of financial aid that students are required to pay back is 1,090 euros. The total amount of financial aid proposed to be recovered under the preliminary decisions is 43.3 million euros.

Last year Kela sent out repayment proposals to 34,800 students, while the total amount recovered was 45.4 million euros.

The number of students who were sent a preliminary decision increased by more than 5,000. At the same time, the amount of financial aid being recovered decreased because the majority of students were in autumn 2017 transferred from the student housing supplement scheme over to the general housing allowance scheme. The current round of income monitoring does not apply to general housing allowance payments.

The annual income limit

The annual income limit varies according to the number of months for which a student takes out financial aid. Students who in 2017 took out financial aid for nine months can have earned other income of up to 11,850 euros in that year. On average, financial aid recipients had 8,540 euros in taxable income (not including financial aid) in 2017.

According to Kela, the income limits were raised by 1% at the beginning of 2018. The annual income limit is now EUR 11,973 for students who get financial aid for nine months.

One-month deadline for a review request

Kela does not know what portion of a student’s income was earned during periods of active study. If the reason for exceeding the annual income limit is income earned not during periods of active study but for example after graduation, the overpayment debt may be reduced or waived altogether.

Students can file a review request in which they should provide details of their studies and specify when the income was earned. The deadline for filing a review request is 21 March 2019. Students must provide details of their studies and when they earned their income if they started a course of study, graduated or used up their maximum financial aid entitlement during 2017.

In previous years, about one quarter of those who were sent a repayment proposal were new or graduated students. The preliminary decision contains instructions for how to file a review request or agree on repayment arrangements.

National incomes registry

Kela says in the future will use the national incomes register to carry out income checks on financial aid recipients. Kela can use the incomes register to check whether the income in excess of the annual limit was earned outside the period of active study. Students will no longer have to provide Kela with details on when they earned their income.

Kela will first apply the incomes register to the income monitoring round for 2019, which will be carried out in 2021. Earlier adoption of the register is not possible because data will not begin to accumulate in the register until the beginning of 2019.

Students must keep track of their income total

The Social Security authority reminds students that they should keep track of their annual income so as not to exceed the income limit. Financial aid payments can be conveniently cancelled, returned or stopped via Kela’s online customer service HERE

The deadline for returning financial aid voluntarily for 2018 is the end of May 2019. If a student does not cancel or return financial aid, any overpayments of aid are recovered and are subject to a surcharge of 7.5%. This is not interest but a one-time payment.