We demand an interest rate cap on student loans
STATEMENT
The Student Union of the University of Helsinki (HYY) supports an interest rate cap on student loans. Students must be protected from unreasonable increases in interest rates.
‘Students have been getting into debt at an increasing rate since the 2017 student aid reform that increased the emphasis on loans in student aid. For this reason, an increasing number of students have large student loans that they have used primarily on basic living expenses such as paying rent and buying food. According to the Eurostudent VII study, 69% of students take out student loans because of the insufficiency of the study grant and the general housing allowance’, Chair of HYY’s Board Aleksi Tujunen reminds us.
During studies, the interest is capitalised, that is, added as part of the student loan. The most common interest rate in student loans is the 12-month Euribor, which had a sub-zero rate for a long time. During the autumn, however, the reference rate has risen to over 2.5 per cent. If a student completes both bachelor’s and master’s degrees and takes out a student loan for all available months of study, a 2.5% interest rate would add up to almost 3,000 euros extra to pay back.
‘Higher education students are under an increasing amount of strain, with worries over subsistence one of the most significant stressors. According to the Finnish Student Health Survey, one in three higher education students have mental health problems, while 13% deal with meagre and uncertain subsistence. A major debt burden does not support wellbeing during studies or after graduation’, Member of the Board Jenny Kasongo points out.
The Ministry of Education and Culture must launch a report on implementing an interest rate cap or a corresponding protective measure at once. The current student aid system forces students to get into debt, which means that society must also help them cope with the rising interest rates.
Further information:
Aleksi Tujunen
Chair of the Board
aleksi.tujunen@hyy.fi
050 475 1280
Jenny Kasongo
Member of the Board in charge of subsistence
jenny.kasongo@hyy.fi
050 595 0327
