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Changes to the duration and amount of study grant

Opetus- ja kulttuuriministeriö 3.11.2016 13.53 | Published in English on 30.3.2017 at 13.06
Press release

The Government proposes that the Act on Financial Aid for Students be reformed. The amount of the study grant in higher education would be brought to the same level with the study grant in secondary education, and the maximum period of eligibility for the grant would be shortened.

The amount of the government guarantee for a student loan would be raised, which means that the total amount of student financial aid (study grant and student loan combined) would grow.

Furthermore, students would in future receive general housing allowance instead of housing supplement, with the exception of students studying abroad, students attending fee-based studies at a folk high school, and students living in a folk high school dormitory. The Government submitted a proposal on the reform to the Parliament on 3 November.

The Government proposes that the amount of the study grant payable to students in higher education be harmonised with the amount payable to students in secondary education. This means that the maximum amount would be lowered to EUR 250.28 per month. The maximum amount of the government guarantee for a student loan is proposed to be raised from EUR 400 to EUR 650 per month for those studying in Finland and from EUR 700 to EUR 800 for those studying abroad.

The raise in the amount of the loan guarantee would apply to both higher education students and other students. Secondary education students could take out the loan in one instalment per semester in the same manner as higher education students.

In addition, the loan guarantee for those under 18 and studying elsewhere than in a higher education institution would be raised from EUR 260 to EUR 300 per month. The credit information of a student applying for a loan guarantee would no longer be checked against the credit data file.

To improve equality between the different levels of education, parents' income would no longer have a negative impact on the amount of the study grant payable to secondary education students aged between 18 and 19 and living independently.

The maximum amount of financial aid payable to a student aged over 18, living independently and studying in Finland would be EUR 900.28 per month (study grant EUR 250.28 + loan guarantee EUR 650) and to a student studying abroad EUR 1,260.28 per month (study grant EUR 250.28 + loan guarantee EUR 800 + housing supplement EUR 210).

In future, students would, as a rule, be covered by the general housing allowance scheme, which would most benefit students with low income and high housing expenses. Housing supplement would also in future be paid to students studying abroad, and the maximum amount of the supplement would be EUR 210 per month.

The amount of the housing supplement payable to a student attending fee-based studies at a folk high school, a sports institute or the Sámi Education Institute and living in the school dormitory is EUR 88.87 per month. Together with the proposal presented above, the Government also submitted a proposal on the amendment of the Act on General Housing Allowance to the Parliament.

The maximum total period of financial aid intended for all higher education studies would be shortened from 64 to 54 months. In addition, the maximum period of aid per degree would be shortened by two months. The total period of eligibility for financial aid in Bachelor's and Master's degree studies worth 360 credits would, however, be 57 months.

The limits for students' annual income would be tied to the index of wage and salary earnings and they would be adjusted every two years only if the income limits were raised. If a student exceeds the annual income limit and Kela needs to recover study grant and housing supplement from the student, the amount being recovered is at the moment increased by 15 per cent. This is proposed to be lowered to 7.5 per cent, which would facilitate the economic situation of students having to pay back some financial aid.

The proposal is included in the 2017 budget proposal and will be discussed alongside it.

The aim is that most of the proposed amendments will enter into force on 1 August 2017.

Influences on students' economy

As of 1 August 2017, the financial aid for students would according to the proposal consist of a study grant, a government guarantee for a student loan and a housing supplement for those studying abroad or living in a dormitory. The maximum amount of study grant payable to a student who has began his or her higher education studies on or after 1 August 2014 and lives independently would be lowered by EUR 86.48 per month, i.e. from EUR 336.76 to EUR 250.28. The maximum monthly amount of the government guarantee for a student loan would be raised by 62.5% (EUR 250 per month) for students over 18 years of age.

The maximum total amount of financial aid (study grant and student loan) payable to a higher education student over 18 years of age living independently would be increased by 22%. In this new model, the combined amount of the study grant and the government guarantee for a student loan would better than before cover students' living expenses while they are studying full time.

The new maximum period of eligibility applicable to all studies in higher education (54 months) would cover a period of approximately six academic years. The period may also in future be extended on discretionary grounds within the limits of the maximum period of eligibility. When it comes to the monitoring of study progress, the requirement of five earned credits per month of financial aid would remain as it is.

The conditions for a student loan compensation would also remain at the current level. A student may be eligible for a student loan compensation if he or she completes the degree within the target time.The student loan compensation means that Kela pays back part of the student loan. The student loan compensation is equal to 40 per cent of the amount of outstanding student debt exceeding EUR 2,500.

The housing supplement for students living in rental housing abroad would remain at the current level. The same would also apply to students attending fee-based studies in a folk high school, a sports institute or the Sámi Education Institute and living in the school dormitory. Other students would be covered by the general housing allowance scheme. Together with the proposal presented above, the Government also submitted a proposal for an act amending the Act on General Housing Allowance to the Parliament.

Inquiries:
Ministerial Adviser Virpi Hiltunen, tel. 0295 3 30110, [email protected]