Student loan stock exceeds €4bn in Jan

In January 2020, drawdowns of student loans totalled EUR 308 million, which is eight per cent more than that in the corresponding month of the previous year and more than ever before month-on-month, according to a latest Bank of Finland statistical bulletin.

The average interest rate on student loan drawdowns was record low, at 0.34 per cent, compared to 0.48 per cent in January 2019.

Of the loans drawn down, 90 per cent were linked to Euribor rates and 10 per cent to banks’ own reference rates. The average interest rate on the Euribor-linked loans was 0.27 per cent and that on the prime rate-linked loans was 0.88 per cent.

Fuelled by the high volume of drawdowns, the stock of student loans grew to well over four billion euros, reaching EUR 4.3bn at the end of January 2020. Since the student financial aid reform of 2017, the student loan stock has grown by EUR 1.7bn. In January 2020, the annual growth rate of the stock was 17 per cent.

Growth in the student loan stock is not only due to higher loan amounts granted as a result of the student financial aid reform. The number of borrowers has also increased, which has been reflected in recent years as a notable rise in the total number of persons with outstanding student loan debt.

According to the statistics of the Social Insurance Institution of Finland (Kela), in the academic year 2018–2019, the number of persons with outstanding student loan debt was 435,000, which is 80,000 persons more than that three years earlier. The low level of interest rates has also supported the popularity of student loans.