Recovery of student loan debt repaid under the government loan guarantee

The student loan is a loan guaranteed by Kela. If you do not pay back your loan or pay interest to the bank in time, the bank will terminate the student loan and 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).

When Kela has paid your student loan to the bank, you will get a payment reminder for the student loan debt repaid under the government loan guarantee. If you cannot pay the amount by the due date, you can suggest a payment plan for payment in instalments to Kela’s Overpayment Recovery Centre.

If you have not paid the debt or agreed on how to pay it, Kela will refer the debt to collection through an enforcement order. Kela usually sends two payment reminders before referring the debt to collection through an enforcement order.

If you do not have sufficient ability to pay to suggest an acceptable payment plan, Kela will refer the debt to collection through an enforcement order.

Instructions on how to make a payment plan for payment in instalments are available at How to deal with recovery-related issues.

The interest levied on student loan debt repaid under the government loan guarantee is 4%.

The Positive credit register

Kela has a statutory obligation to report student loan debt repaid under the government loan guarantee according to the Act on Student Financial Aid to the Positive credit register. The Positive credit register is a register administrated by the Finnish Tax Administration, and it contains comprehensive data on the loans and incomes of private individuals. The aim of the register is that lenders better can assess loan applicants’ ability to pay.

Kela also reports to the register any changes in the debt during the collection. In addition, Kela reports information on termination of the collection. You do not have to report data to the register yourself.

Exemptions from payment

If your income is small and Kela has repaid your student loan to the bank, you can apply for exemption from the payment of interest on the student loan debt repaid under the government loan guarantee or from the payment of the whole debt from Kela.

Exemption from the payment of interest

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. 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.

As from 1 March 2024, the income limits are the following:

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

If you know that your income will not exceed the maximum income limit for interest assistance, you can apply for exemption already beforehand. Exemption is usually not granted beforehand for more than one year at a time.

You can also apply for exemption retrospectively for a maximum of one year. If you have especially weighty reasons, you can be granted exemption for a  longer period than one year.

Exemption from the payment of the debt

You can be granted exemption from payment of the whole debt if

• your income is less than a specified limit and
• you are permanently incapable of work or you have been continuously incapable of work for at least 5 years. 

Instructions on how to apply for an exemption from payment are available at How to deal with recovery-related issues.

Waiving recovery of student loan debt repaid under the government loan guarantee

In certain situations, Kela may waive the recovery of student loan debt repaid under the government loan guarantee completely. A prerequisite for a waiver of the recovery is that

• the debt has been collected for a long time without result
• all methods of collection, including collection through an enforcement order, have been used
• your financial situation has worsened permanently, so that the benefit cannot be collected later either.

Kela can also waive the recovery completely, if the costs of the recovery for Kela would be unreasonably high in relation to the amount of the student loan debt repaid under the government loan guarantee.

Waiving a recovery is possible on Kela's or your initiative. Waiving of a recovery is always decided on by Kela's Overpayment Recovery Centre.

Waiving recovery in the case of death

Recovery of student loan debt is waived upon death. If the student loan is being recovered by Kela, Kela is notified of the death automatically and informs the estate of the decision to waive the recovery.

If the student loan has not been transferred from the bank to Kela for recovery, Kela pays the loan to the bank after having received information about the death and notifies the estate of the waiver.

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