Interest assistance

Interest assistance means that Kela pays all of the interest due on your government-guaranteed student loan. There is no obligation to repay Kela for the interest.

Eligibility

You can get interest assistance if

  • your income is less than a specified limit and
  • your bank no longer adds the interest due to your loan principal but has begun to charge you interest.

As long as you receive financial aid payments, the bank will not charge you interest. Instead, the interest is capitalised, i.e., added to the principal amount of the loan. When you stop receiving financial aid, the bank will capitalise the interest for another term. After that it will begin to charge you interest.

For example, if you last received financial aid in spring 2022, your bank will continue to capitalise the interest on your student loan until December 2022, and will begin to charge you interest in June 2023.

If you are performing conscript service, Kela pays the interest on your student loan under the conscript's allowance scheme.

You cannot get interest assistance for loans which Kela has paid back to the lender bank under its loan guarantee liability and which Kela is collecting from you.

Income limits

In order to qualify for interest assistance, your income must remain below a specific limit. The income limit is higher if you have dependent children of your own or if dependent children of your spouse or partner are living with you. Cohabitation can also refer to same-sex partners. The following income limits apply until the end of February 2024:

  • no children: €1,457 per month
  • one child: €1,683 per month
  • two children: €1,744 per month
  • three or more children: €1,847 per month

The income limits are raised every other year in line with the increase in wages and prices.

Interest assistance is affected by income earned in the 4 months preceding the interest due date. If you have had varying amounts of monthly income over that period, the amounts are averaged and the average amount may not exceed the income limit. Kela refers to gross income, i.e., income before taxes and deductions. For more information, see How to apply.

Interest assistance is affected by taxable income from earnings and capital. This includes for example

  • wages and salaries
  • self-employment income
  • rental income
  • dividends
  • capital gains
  • pensions
  • child home care allowance payments
  • labour market subsidy and unemployment allowances
  • sickness allowance and maternity, paternity and parental allowances
  • other welfare benefits which are subject to tax
  • comparable income from abroad.

Tax-exempt incomes and benefits do not affect the interest assistance. Tax-exempt benefits include e.g., housing allowance, child benefit and social assistance.

Rules concerning the effect of income on interest assistance are the same as for financial aid for students.

Example

A student last received financial aid for spring term 2021. The bank capitalised the interest due on her student loan in June 2021 and again in December 2021. The student is first eligible for interest assistance for interest payments due in June 2022.

Example

A student applies for interest assistance for interest payments which will become due in December. She has no children.

Eligibility for interest assistance is affected by her income in August, September, October and November, which amount to €700, €2,000, €1,500 and €1,000, respectively. Averaged over four months, her income comes to €1,300 per month. This is less than the income limit of €1,457 per month. The student is granted interest assistance.