Finland to overhaul student loan forgiveness and aid amid council review of debt risks

The Finnish government is preparing a major reform of the student financial aid system. Under the proposal, loan forgiveness will be applied in two tiers: graduates who finish within the target period will receive a 45 % rebate on the portion of their loan exceeding €8,000, while those who graduate later will receive a 30 % rebate, with a maximum refund of €7,000. Additional safeguards will be introduced, such as adding interest to the principal for two semesters after the study grant ends and preventing banks from demanding full repayment for short payment delays.

The reform also raises the child allowance for students with dependent children by €30 per month for each child under 18 after the first child, and adjusts parental income limits for study grants starting in 2028. The Legislative Assessment Council (Lainsäädännön arviointineuvosto) has issued a statement reviewing the draft legislation, noting that the long‑term effects on student indebtedness remain uncertain and calling for further analysis of impacts on employment, housing loans and overall debt sustainability.

The changes aim to secure students' livelihoods, encourage full‑time study, and improve conditions for the most vulnerable, family‑bearing students while maintaining current income thresholds for study grants through 2027‑2028.