Last week, the Student Union of the University of Lapland issued a statement on the government’s proposal for a comprehensive reform of student financial aid. LYY believes that the reform supports and perpetuates the current loan-based model. The reform does not meet even the government’s own objective of enabling full-time study.  

The biggest change in the draft bill is the two-tier model for student loan repayment, under which graduates completing their studies within the target timeframe receive a higher repayment than those graduating within the standard timeframe. Furthermore, the draft bill proposes that loan repayment relief is only available for loans up to €8,000 but capped at a maximum of €7,000. LYY believes that the legislative amendment will favor students who do not face any challenges in completing their studies. The impact assessment for the draft bill also states that the effects would be moderate. LYY is concerned that the two-tier model does not incentivize master’s students at university to graduate on time, as the full repayment relief can already be obtained upon completion of a bachelor’s degree. At the same time, raising the loan repayment relief to €8,000 may encourage students to take out unnecessary additional loans.  

The Student Union proposes that the loan repayment model be further developed; a more effective model would be an annual tiered system in which the loan repayment amount would decrease the longer studies continue. This model would encourage students to graduate both during their studies and after the target and deadline periods. The model would reduce students’ interest costs and the total amount of their loans. Furthermore, the Student Union proposed that the income limits for interest subsidies be raised and that the possibility of an interest cap on student loans be investigated.  

However, LYY viewed the proposed increase in the carer’s allowance and the greater flexibility regarding the duration of support as positive aspects of the bill. The amendment takes better account of changes in students’ lives, such as facing an illness. Nevertheless, the Student Union believes that the government now had an opportunity to improve students’ livelihoods comprehensively by increasing money benefits and linking the housing supplement to the national pension index, whilst at the same time reducing the rapid accumulation of student debt.