Education Policy Edits: The Student Financial Aid Reform is Coming! (But Not Just Yet…)

Education Policy Edits: JAMKO’s Education Policy Responsible opens up students on topical issues

Author: Aamos Wilhelms, JAMKO Education Policy Responsible

Reading time: 4 mins

Hey student! Feeling confused about what this student financial aid reform is all about? What does it actually mean? Let me break it down for you.

A year ago, the Ministry of Education and Culture set up a working group to prepare a report on how the student financial aid reform should be implemented. The working group submitted its report to Minister Bergqvist last week. SAMOK (The Union of Students in Finnish Universities of Applied Sciences) and SYL (The National Union of University Students in Finland) have also collaborated to present their own proposals to the working group. You can read their proposals here (in Finnish)

This report serves as a roadmap and a starting point for the Orpo government to fix the student financial aid system. SAMOK will continue advocacy efforts as part of the statement and meeting rounds related to the report.

Wait, what are those rounds? The statement round means that the report is sent to experts, stakeholders, and authorities for comments. The meeting round happens alongside this, meaning that the working group or officials arrange direct meetings with various stakeholders such as student organizations, higher education institutions, ministries, and Kela.

Currently, student financial aid consists of a study grant, a student loan, and a provider supplement for students with children. In the future, the goal is to expand financial aid to include a student housing supplement and remove students from the general housing allowance system.

But hey, so you don’t have to read the whole report, I’ve put together the key points for you (there are more than just three). Read them through, and you’ll be up to date on what’s happening. 🙂 If you’re really interested in the full report, you can find here. (in Finnish)

 

Essential Development Proposals

(Key changes needed to ensure the functionality and clarity of the financial aid system.)

All Education Levels

• Index-linking (study grant, housing supplement, and parental income thresholds)
  Currently, the study grant and housing supplement are not automatically increased, even when living costs rise. This means students receive less money in real terms each year as food, rent, and other expenses become more expensive. If study grants and the housing supplement were index-linked, they would automatically adjust with living costs, ensuring that student support doesn’t lose value over time.
• Improving interest assistance
  Interest assistance is an underutilized form of support, even though many borrowers are eligible for it. The problem is that banks may terminate loans before interest assistance can be applied. Needed improvements include raising income limits and making the payment process more flexible by directing the assistance straight to banks.
• Developing student loan application processes
  The goal is to improve loan accessibility, secure student borrowers’ finances, and reduce state loan guarantee costs.
• Enhancing government-guaranteed loan debt management
  Currently, a significant number of student loans default and are transferred to the government guarantee system each year. By improving debt restructuring options, it’s possible to prevent debt spirals and streamline administration.
• Updating definitions and terminology
  The complexity of the financial aid system makes it difficult to understand and administer. Clarifying the terminology would help both students and administrators.

Higher Education

• Improving the current student loan compensation system
  Right now, to receive student loan compensation, students must graduate within the target time (or at most one semester late). If they take longer, they receive no compensation at all. This is problematic for students whose studies are delayed only slightly due to illness, internships, or other personal reasons.

A graduated compensation model would allow students who finish a little late to still receive part of the loan compensation. This system would encourage students to complete their degrees as quickly as possible while providing flexibility for life situations. It could also reduce student stress and pressure, as currently, even a small delay results in losing the entire compensation.

• Clarifying the criteria for discretionary extensions of financial aid
  The goal is to make decision-making clearer and fairer by improving the consistency of how extensions are granted.
• Restructuring meal support to directly benefit students
  Currently, meal support is a subsidy paid to student cafeterias. The proposal suggests changing it into a direct meal benefit for students, ensuring better targeting of support.

Extensive Development Proposals

(Broader reforms that could significantly impact the entire financial aid system.)

All Education Levels

• Raising the study grant amount
  Increasing the study grant would strengthen students’ financial security and reduce the need for student loans. A €50 monthly increase would cost around €90 million per year.
• Simplifying the study grant table
  The current system has too many different study grant levels, making it confusing. Simplifying the structure would make the financial aid system easier to understand and manage.

Higher Education

• Extending the number of supported months
  Currently, students have a limited number of financial aid months, which can make it difficult to complete degrees on time. Increasing the number of months available for study grants and/or housing supplements would reduce pressure to take loans and speed up graduation.
• Limiting student financial aid to degree completion
  In the future, financial aid would be primarily reserved for completing a higher education degree and preparatory programs for immigrants, helping clarify the system’s purpose and reduce costs.
• Reforming student loan compensation into a graduated system
  A graduated compensation system would still encourage students to graduate on time while allowing partial compensation for those who finish slightly later.
• Abolishing student loan compensation altogether
  Removing the compensation could increase student debt and extend study times, but would significantly reduce state expenses in the long run.
• Evaluating measures to promote on-time degree completion
  The goal is to identify and implement strategies that encourage faster graduation, such as improving student advising and support services.
• Exploring a meal benefit model for full-time higher education students
  Currently, meal support is a state subsidy for student cafeterias, but a direct student meal benefit could be clearer and better targeted.

Hope this cleared things up for you! If you still have questions, feel free to reach out to me via email at kopo@jamko.fi.

Aamos Wilhelms, JAMKO’s Educational Policy Responsible