Working group submitted proposals for developing student financial aid – both essential and comprehensive restructuring discussed
A working group preparing an overhaul of student financial aid has assessed the current situation in student financial aid and key development needs in the student financial aid system. Needs for development that were deemed essential include reinstating indexation and restructuring interest assistance and loan granting practices to improve the security of student loans. The working group's proposals were submitted to Minister Sandra Bergqvist on 30 January.
However, the most significant and meaningful changes would be to increase the size of study grants, to revise or abolish the student loan compensation scheme, and proposals related to student financial aid periods. In addition, the nomenclature in the student financial aid system should be made clearer and the implementation of the system made easier. Impact assessments should be prepared as part of further preparation.
- The working group assessed the current situation in student financial aid extensively and presented a number of essential proposals for development that will be addressed in the course of the spring. In line with the Government Programme, the aim is to make sure students can manage financially during their studies, to improve the incentives in student financial aid and to encourage students to complete their studies in the normative time,” says Sandra Bergqvist, Minister of Youth, Sport and Physical Activity.
Student financial aid in upper secondary education: Focus on sources of income and incentives for students within the scope of compulsory education
Study grants: The size of the study grants will be readjusted using index adjustments and the level of the grants will be raised to improve the adequacy of the grants. The income thresholds of the parents of students will be tied to the index and raised. Students in low-income families will continue to be guaranteed the right to student financial aid.
Student loans: The central government guarantee is granted to students who no longer live at home regardless of their age, but not to minors living with their parents. The aim is to reduce the number of young students with student loans.
Maximum duration of student financial aid: Support for studies other than compulsory education is granted for a maximum of 50 months. This makes it possible to complete an upper secondary qualification after general upper secondary school or to use student financial aid in adulthood.
Right to student financial aid: Student financial aid is available for education subject to public supervision in Finland.
In addition, the travel and accommodation benefits for students within the scope of compulsory education will be incorporated into the student financial aid system, and the subsidy for school journeys will be examined at a later date.
Student financial aid in higher education: Income and incentives for completing the first qualification within the normative time
Study grants: The size of the study grants will be readjusted using index adjustments and the level of the grants will be raised to improve the adequacy of the grants.
Student loans: The terms for the student loan compensations could be revised in a cost-neutral manner, on a staggered basis, for example. This way the right to compensation would become broader and encourage students to use of the loan and complete their degree within the normative time.
Duration of student financial aid: The number of months that qualify for a grant will be increased to encourage students to complete a tertiary degree, either for all tertiary education studies or per degree. Over the months of additional financial aid, the student financial aid consists of either a study grant, a housing supplement and a central government guarantee for a student loan or of a housing supplement and an incremental government guarantee for student loans.
Meal allowances: The right to meal allowances will be restricted to apply to students completing a tertiary degree in Finland, and an alternative meal benefit model will be examined to replace meal allowances.
Elements to improve the usability and security of student loans
The income thresholds for interest assistance will be raised and their coverage improved to take into account the student loans of low-income students and to curb central government guarantee liability expenditure.
To improve the usability of student loans, loan granting practices and the management of guarantee liabilities will be reviewed and loan awareness will be stepped up.
Adopting a financially attractive alternative to the general housing allowance that favours shared student housing
The housing supplement covers a maximum of 80 per cent of overall housing cost thresholds per municipality group (EUR 296/248 or EUR 216 per month) as of 1 August 2025. These euro sums for housing supplements should be indexed to ensure adequate financial support when housing costs rise.
The support for students abroad consists of either study grant, housing supplement and a central government guarantee for student loans or study grant and central government guarantee for student loans, which would simplify the system.
- Student financial aid is the primary form of financial support for full-time students. Its purpose is to secure a source of income for students during their studies. So, when the support systems are being reviewed, the emphasis should be on reinforcing the elements that impact studies, such as study grants, housing supplements and government guarantees for student loans. Moreover, if the system of student financial aid aims to encourage students to complete a qualification or degree within the normative time, the terms of student financial aid must also support this objective. When making further preparations, it is necessary to assess whether special incentives are required,” says Virpi Hiltunen, Ministerial Adviser, chair of the working group.
- Under the Act on Financial Aid for Students (65/1994), student financial aid consists of the student's study grant and housing supplement as well as a central government guarantee for student loans.
- Student loans are market-based and granted by banks.
- Students who accepted their first student place for a tertiary education degree on 1 August 2014 or later and have student loans are entitled to the student loan compensation if they complete their degree within the normative time.
- Central government may pay the interest on student loans to the banks on behalf of low-income students (interest assistance).
- In order to lower the price of student meals for students in tertiary education, student canteens will receive a meal subsidy (EUR 2.55 per meal).
- The costs of school journeys for students other than those in tertiary education are subsidised in accordance with the Act on Subsidies for School Journeys (48/1997). As of 1 August 2025, students attending compulsory education who have a long school journey are entitled to subsidies for school journeys. Subsidies for school journeys can be paid to the ticket vendor, the education provider or the student, depending on how the student is travelling.
The objectives of the overhaul are to:
- Ensure that the level of support is sufficient for full-time studying.
- Encourage students to complete a degree or qualification within the normative time.
- Improve the security of student loans.
- Clarify the system and make it easier to implement.
Student financial aid expenditure in the national budget
Altogether 332,575 students received student financial aid in 2024. A total of 212,442 of them studied at a higher education institution and the rest at other educational institutions or abroad (Kelasto). In the 2025 Budget, expenditure for student financial aid amounts to EUR 1,065 million, of which 67 per cent (EUR 699.3 million) consists of expenditure on study grants and housing supplements.
Students other than those who have children will be transferred from the household-specific general housing allowance to an individual student housing supplement as of 1 August 2025. This means that from 1 August 2025 onwards the amount of student financial aid received by individual students will not exceed EUR 1,425.38 per month. It consists of a maximum study grant of EUR 279.38 per month and the housing supplement is EUR 296, 248 or 216 per month depending on the student's municipality of residence.
The maximum amount of central government guarantees for student loans is EUR 850 per month per student. The share of expenditure arising from central government guarantees on student loans is EUR 225.9 million, of which approximately EUR 98 million accounts for student loan compensations. The average student loan compensation is around EUR 5,000. Meal allowances for higher education students account for an expenditure share of approximately EUR 39.6 million and subsidies for school journeys for EUR 100.2 million. The subsidy for school journeys per student is EUR 158 a month.
Memorandum of the working group preparing the comprehensive reform of student financial aid
Inquiries: Virpi Hiltunen, Ministerial Adviser, Chair of the working group, Ministry of Education and Culture, tel. +358 295 330 110, [email protected]