Student loans in Finland are becoming a heavier financial burden as larger debts, higher interest costs and a weak labour market make repayment more difficult for graduates. In 2025, the Finnish Social Insurance Institution (Kela) paid almost €8.7 million in interest assistance, while the state also had to cover more than €108 million in unpaid loans owed to banks.
Student debt in Finland has more than doubled
The average amount owed by Finnish student loan borrowers has more than doubled over the past decade. At the end of 2025, Finland had 525,555 people with student debt, equivalent to about 9 percent of the population, according to figures published by Kela.
Their average outstanding debt was €12,690, around €600 more than one year earlier when adjusted to 2025 prices. The average rose to more than €14,500 among borrowers living in Helsinki.
About 159,200 students took out loans during 2025, an increase of 2,600 from the previous year. Kela has linked the renewed growth partly to changes in housing support and to the weak employment situation among young people.
Finland’s student financial aid system includes a study grant, a housing supplement and a state-guaranteed loan issued by a commercial bank. The maximum monthly loan available to higher education students was increased from €650 to €850 in 2024.
Although higher education is generally tuition-free for Finnish and other EU and European Economic Area students, loans are increasingly used to cover rent, food and other essential living costs.
More graduates need help paying interest
The consequences have become increasingly visible after graduation. In 2025, 18,580 borrowers received interest assistance, more than twice the number recorded two years earlier. Kela paid approximately €8.7 million, or an average of €467 per recipient, according to the agency’s latest figures on interest assistance.
Kela can pay the interest on a former student’s loan when their income remains below a specified threshold. Since March 2026, the monthly income limit has been €1,662 for a borrower without children, with higher thresholds applying to families with children. The assistance is not subsequently recovered from the recipient.
Kela said that rising interest rates, larger loans and poor employment prospects have all reduced graduates’ ability to meet their payments.
The problem is illustrated by the experience of Emilia Heinonen, a 24-year-old information and communications technology graduate interviewed by Finnish public broadcaster Yle. She accumulated around €15,000 in debt during four years at Turku University of Applied Sciences (Turun ammattikorkeakoulu), even after receiving Finland’s student loan compensation for graduating within the required period.
“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 told Yle.
She currently pays around €400 a year in interest alone.
A weak labour market is making repayment harder
Heinonen graduated in 2024 but remained unemployed for two years despite submitting more than 100 job applications. During that period, interest continued to accumulate and she eventually applied for Kela’s interest assistance.
Her experience reflects a broader problem for recent graduates. Student loans are usually considered relatively manageable when employment begins soon after graduation. A prolonged period without work can instead turn interest payments into a significant expense before the borrower has begun reducing the principal.
The growing amounts borrowed have also attracted the attention of Finnish banks. S-Bank (S-Pankki) credit director Mari Govenius told Yle that a student loan of €40,000 is no longer unusual among higher education students. The bank’s student loan portfolio was 15 percent larger in July than one year earlier.
At the same time, more borrowers have been unable to make their repayments. Student loans are guaranteed by the Finnish state. When a borrower defaults, Kela repays the bank and then seeks to recover the money from the borrower.
In 2025, Kela paid more than €108 million to banks on behalf of almost 9,000 student loan borrowers, according to data reported by Yle. These guarantee payments have reached record levels over the past two years.
Student loans are affecting decisions after graduation
Heinonen found work in May 2026 through a recruitment training programme and now works in the artificial intelligence and marketing team of a food factory. She has already repaid €1,300 during the summer and plans to clear the remaining debt within a few years.
Doing so has required postponing other plans. Heinonen and her fiancé continue to live in a rented one-bedroom apartment, while moving to a larger home and organising their wedding have been put on hold.
She believes that student debt is also encouraging many young adults to delay starting a family.
Finland’s system still offers graduates some protection, including interest assistance and a loan compensation that covers 40 percent of qualifying debt above €2,500 for students who complete their degrees on time. However, the latest figures show that these mechanisms are operating within an increasingly loan-dependent model.
As student support covers a smaller share of everyday expenses and employment remains uncertain, borrowing is no longer simply an optional supplement for many Finnish students. It is becoming an essential part of financing higher education, with financial consequences that can continue well beyond graduation.
