Military service can cost students thousands in loan compensation

Military or civilian service can cost students thousands of euros if they have not handled their student financial aid and loan matters properly, Yle reports. A proposed legal amendment could change how the deadline for student loan compensation is calculated.

Students who complete their degree within the required timeframe may qualify for compensation on their student loan. The deadline is extended for the time spent in military or civilian service, which should in principle give students the same opportunity as others to graduate on time and receive the compensation.

In practice, students may not be able to resume their studies immediately after service. Lectures may be full, and universities of applied sciences often do not allow students to join courses in the middle of a semester.

Some students also begin their service in January instead of starting their studies in the autumn and interrupting them a few months later.

However, the Social Insurance Institution of Finland, known as Kela, can extend the degree deadline only for the period when the student is physically serving in the military or civilian service. If a student wants to qualify for the loan compensation, they may therefore have to accelerate their studies after returning, according to Kela planner Johan Jauhiainen.

Students entering military or civilian service should notify Kela as soon as they learn they will begin service. This helps ensure that their student financial aid is stopped before the service starts and prevents overpayments.

Students who have received financial aid during their service should notify Kela immediately if the aid has not already been stopped. Kela will reclaim the payments retrospectively, but the months for which aid was paid will be returned for future use.

The time spent in military or civilian service can be taken into account when Kela decides whether a student qualifies for loan compensation. The deadline for completing the degree is extended by the length of the service.

However, the period used to determine eligibility for the compensation continues to run during any delay caused by the service. This can happen, for example, if a student begins service in winter and the study period starts in autumn, or if the student does not resume studies immediately after completing the service.

Jauhiainen recommends suspending student financial aid during any study break caused by military or civilian service, if the student can afford to do so. Students can also discuss extending their aid with Kela, which assesses individually whether their circumstances, such as returning from service, justify granting additional aid months.

Additional student aid months would not change the deadline for qualifying for student loan compensation.

Kela has proposed that the study period for students completing military or civilian service should begin only from their first semester of attendance. The deadline would therefore not start running as soon as a student accepts a place to study.

According to Jauhiainen, the proposal has been included in a draft government bill. The government may submit the bill for consideration.