Young graduate says student loan became an unbearable burden

Twenty-four-year-old Emilia Heinonen regrets taking out a student loan after struggling to find work following graduation, Yle reports. She accumulated about 15,000 euros in debt during four years of engineering studies, after student loan compensation, and now pays around 400 euros a year in interest.

“I would not take it again at any price. It is far too great a burden at the moment, and its costs are far too high,” Heinonen says.

Heinonen graduated from Turku University of Applied Sciences in 2024. She had prepared for repaying the loan, but the interest costs came as a surprise.

“It feels as if the money just disappears into thin air. I am now paying much more than I originally borrowed.”

Two years without work

Heinonen, who graduated in information and communications technology, was unemployed for two years and sent more than 100 job applications without success.

The length of her unemployment came as a shock.

“When I started studying, I never imagined it would be this difficult. It was an enormously big surprise.”

Meanwhile, interest continued to accumulate on her student loan.

Last year, Heinonen lived on unemployment benefits until she could no longer manage. She eventually applied for interest assistance from Kela, the agency that pays the benefit, for the entire year.

Kela can pay the interest on a student loan if a borrower without children has monthly income of no more than 1,662 euros. The income limit is higher for families with children.

“If I had had to pay it myself, that month would have been impossibly tight. When I received assistance from Kela, I was able to breathe a sigh of relief. I did not have to worry about how I would manage that month.”

Kela’s interest assistance is not reclaimed from the borrower. The assessment is based on gross income, and the income limit is higher if the borrower has custody of minor children or lives with a partner’s minor children.

Record number received interest assistance

Thousands of other student-loan borrowers found themselves in a similar situation last year. Kela paid interest assistance to a record number of borrowers, totalling more than 8.6 million euros.

“Interest assistance is now being used more than before because interest rates used to be very low. When interest amounted to a few dozen euros, even people on low incomes could pay it without applying for assistance,” says Mari Jaakkola, a lawyer in Kela’s finance unit.

Many students have used loans in recent years to cover essential everyday expenses because student support has been reduced. The average student loan has more than doubled over the past ten years.

“When loan amounts are large, the interest is also fairly substantial. It can amount to several hundred euros over, for example, a six-month period,” Jaakkola says.

The maximum monthly student loan amount was raised from 650 euros to 850 euros the year before last. Last year, students had an average of clearly more than 12,000 euros in student loan debt.

According to Jaakkola, housing supplements and student grants alone may no longer be enough to cover students’ everyday costs.

“Support remains fairly small. If someone cannot make up the shortfall by working, a student loan is surely the most practical way to make up for the lack of income,” Jaakkola says.

“A 40,000-euro loan is no longer unusual”

Banks have also noticed the increase in student loan amounts. The amount of student loans taken out from Nordea and S-Bank, among others, has increased during the current year.

“We are seeing that even a student loan of 40,000 euros is no longer unusual for a higher education student,” says Mari Govenius, S-Bank’s head of lending.

S-Bank said its student-loan portfolio had grown by 15 per cent in July compared with the previous year.