The Finnish Social Security institution (Kela) has reviewed the student loans for people who continue their studies for the academic year 2019–2020. A positive decision on student loan guarantee for the next academic year has been sent to 115,925 students, informed Kela through a news release. The first loan disbursement can be taken out starting from 1 August.
According to the information provided by Kela, the usual amount of a student loan is 650 euros per month. Therefore, a student may receive between 2,600€ and 3,250€ in the autumn semester and usually 3,250€ in the spring term. Most students can take out their student loans for the academic year in two disbursements.
The average interest rate for student loans taken out in the spring was 0.48%, according to statistics from the Bank of Finland. The interest rates on student loans have never been so low before.
Guarantee is valid for 30 years
The mechanism works as follows: the student loan is a government-guaranteed loan that the student must pay back. If Kela accepts to provide a loan guarantee, the student can apply for a loan at a bank of his choice.
Because the loan is guaranteed by the Finnish Social Security institution, the student does not have to put up any other financial securities. The loan guarantee is valid for up to 30 years from the first disbursement of the loan funds.
The interest payable on the loan and the repayment schedule are agreed between the student and the bank.
For the academic year 2019-2020, a positive decision on loan guarantee has now been sent to 115,085 recipients of student financial aid and to 840 recipients of adult education subsidy.
The right to loan guarantee for 1,405 students who continue their studies will be decided later at the same time as the student’s application for financial aid or other pending issue is processed. Students can themselves check the validity of the student loan guarantee via Kela’s e-service.
If the student loan for the academic year 2018–2019 has not yet been taken out, the student can still do it before the end of July.
A year ago, 111,390 students received a positive decision on loan guarantee.
In case of payment default
Kela remarks that payment default is not necessarily a hindrance for the granting of a student loan guarantee, but if the student’s earlier student loan is subject to collection by Kela, no new loan guarantee is granted.
However, loan guarantee can in certain situations be granted despite an earlier student loan being collected by Kela. With the negative decision, Kela sends more detailed instructions explaining in which situations loan guarantee can be granted.
This time, 270 students were denied loan guarantee because of collection of an earlier student loan. Last year, 260 students received a negative decision.
Financial aid for high school students
At the same time that Kela decided on student loans for the next academic year, the institution also adjusted the period of financial aid per academic year in regards to financial aid for high school students. After a legislative change in this regard, students from upper secondary schools can now receive financial aid also for August.
Kela has sent automated decisions of adjustment to 9,500 students of upper secondary schools. If the person studies the whole academic year 2019–2020, financial aid is awarded for 10 months, from the beginning of August to the end of May.
