Government guarantee for student loans

Besides the Study Grant and the Housing Supplement, the financial aid system also includes an arrangement by which student loans are guaranteed by the government. The loans themselves are granted by banks.

Financial aid can be granted from the beginning of the month in which your application was received by Kela or your school. You can apply for a loan guarantee for the entire duration of your studies, but Kela will grant it one year at a time and check your eligibility before each academic year.

Once you have been granted a loan guarantee, you can contact a bank of your choice and agree the loan terms (including interest and repayment). The bank is notified by Kela of the loan guarantee details. If you are under 18, you must have a power of attorney and the written consent of your legal guardian to apply for a loan.

You must repay the loan after completing your studies. If you experience repayment difficulties, do not hesitate to contact your lender bank.

To qualify for a government loan guarantee, you must be in receipt of a Study Grant or adult education subsidy. Students in higher education who are being paid study grant are awarded the government loan guarantee without application. However, even if you are not in receipt of a Study Grant, you may qualify for a loan guarantee if

• you are between 18 and 19 years of age, live by yourself, and are ineligible to receive the Study Grant on account of your parents' income
• you are under 17 years of age, live by yourself (but are not an upper secondary school student), and are ineligible to receive the Study Grant on account of your entitlement to the Child Benefit (a parental income test applies).

Kela will not normally provide loan guarantees to students who have previously defaulted on a student loan, requiring Kela to pay it back, or who have an impaired credit record. In such a case, you can submit a statement explaining your situation, after which Kela will reconsider your eligibility for a loan guarantee.

The amount of loan guaranteed depends on your age and what level of education you are pursuing. It is up to you to choose how much loan you wish to take out.

Updated 10/31/12

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