Raised income limits for interest assistance for student loans - the number of recipients of interest assistance has increased in recent years

The income limit for interest assistance for student loans was increased in February to EUR 1,589 per month. The income limit is higher if the recipient of interest assistance is the guardian of a child aged under 18 years or if a child aged under 18 years of the recipient’s spouse or partner lives with the recipient.  For one child, the income limit is EUR 1,835 per month. For two children, the income limit is EUR 1,902 per month. For three or more children, the income limit is EUR 2,015 per month. Due to the change, an increasing number of persons have the possibility of getting assistance with interest payments on student loans.

Persons with student loan debt can get interest assistance for interest payments on student loans if their incomes do not exceed the income limit. Interest assistance can be granted when the bank has started to charge interest, that is, about one year after the payment of student financial aid has ended. If the customer is granted interest assistance, Kela pays the interest on the state-guaranteed student loan and the bank's notification fees in their entirety. The customer will not have to pay them back to Kela.

Kela pays the interest assistance to the bank or to the customer. If the interest assistance is payable directly to the bank, the assistance must be applied for at the latest by 5 June. If the interest assistance is payable to the customer, the assistance must be applied for at the latest by 31 August. Kela's website includes instructions on how to apply for interest assistance.

The number of recipients of interest assistance increased eightfold in 2023

In 2023, Kela paid interest assistance for student loans to nearly 8,000 persons. The number of recipients was eight times higher than the year before, when about 1,000 persons received interest assistance. The number of recipients has increased following the increase in the amounts of student loan and the higher interest rates.

- During the time of zero interest rates, there was no need for interest assistance. The general increase in interest rates has changed the situation rapidly and the interest assistance has shown its usefulness, says Ilpo Lahtinen, Senior Coordinator in Kela’s Student Financial Aid Section.

For instance, the typical student loan debt of students who have taken a master’s degree already exceeds EUR 20,000. Currently the interest rates on student loans range between 4% and 4.5%. So, students who have taken a master’s degree typically pay EUR 800-1,000 annually in interest on their student loan.

Interest assistance prevents situations where Kela has to pay an unpaid student loan to the bank

According to Lahtinen, the interest assistance is an important type of assistance for persons with student loan debt and low incomes as well as for public expenditure.

- The interest assistance helps to prevent situations where Kela has to pay an unpaid student loan to the bank.

Kela grants a state guarantee on student loans to recipients of student financial aid and adult education allowance. The bank grants a student loan on the basis of the guarantee. If the borrower does not pay the loan back or pay interest on the loan, Kela is obliged to pay the loan, including interest, to the bank. In such cases, Kela will collect the amount paid to the bank from the borrower.

In 2023, Kela paid EUR 85 million in unpaid student loans to the banks. In all, Kela is collecting student loans from 26,600 persons. The banks have more than half a million customers with student loans and the volume of student loan debt is EUR 6 billion.

Additional information for customers

Interest assistance

Application for interest assistance OT 7e (pdf)

Log in to the OmaKela e-service

How to apply for interest assistance