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Interest and repayment of the student loan

You must pay back your student loan to the bank. The repayment schedule is agreed between you and the bank. Repayment usually begins about six months after the bank has for the last time capitalised the interest due on your student loan, i.e., added it to the loan principal.

If you have started to pay back your student loan and then resume your studies, you can talk to your bank about having a grace period (during which you do not have to make repayments) or other payment arrangements. Kela will notify the bank if you are granted financial aid. You are usually not required to make repayments on your student loan or pay interest while you receive financial aid. However, you should check with your bank or consult the promissory note to find out the terms of repayment of your loan.

Payment of interest

As long as you receive financial aid the bank will continue to capitalise the interest due on your student loan on 15 June and 15 December without any action on your part. In other words, the principal balance of your student loan is increased by the amount of interest.

After your final term on financial aid, the bank will capitalise the interest for an additional term. For example, if you last received financial aid in spring 2024, the last time that the bank will capitalise the interest due on your loan is December 2024.

After that you must pay the interest yourself. You may be eligible for interest assistance on your student loan.

As long as the interest is capitalised by the bank, you cannot pay it yourself. If you are in higher education and make repayments on your student loan while still in school, any repayments you make can reduce the student loan compensation or student loan tax deduction you may be entitled to.

Payment difficulties

If you have difficulty making repayments or paying the interest on your loan, contact the bank in good time before the payment is due.

You can apply to Kela for interest assistance if your income does not exceed certain limits.

Your student loan is guaranteed by Kela. If you do not pay back your loan or pay interest on time, Kela will pay back your student loan to the bank. After that Kela will collect from you the full amount paid to the bank (i.e., the amount owed under the loan guarantee scheme) plus 4 percent interest. You can contact Kela's Overpayment Recovery Centre to discuss how to pay the amount owed under the loan guarantee. If you do not pay, the amount owed under the loan guarantee will be collected from you through legal means.

  • You can be exempted from paying interest on the amount owed under the loan guarantee for any period in which your average taxable income does not exceed the maximum income limit for interest assistance.
  • An exemption from all payments on the debt may be available if you are disabled for work permanently or for a consecutive period of at least five years, and your average taxable income does not exceed the maximum income limit for interest assistance.

Read more about the recovery of student loan debt repaid under the government loan guarantee.

If Kela has paid back your student loan to the bank, you cannot get a new government loan guarantee unless you can show good reason.

Collection of student loan debt is waived upon death. If the student loan is subject to collection by Kela, Kela receives information about the death of the customer automatically and notifies the estate of the waiver. If the student loan has not been transferred from the bank to Kela for collection, Kela pays the loan to the bank after having received information about the customer's death and notifies the estate of the waiver.

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