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Students in Finland worry about escalating debt: "I've fallen off the property ladder"

Young adults face financial distress over their student loans in the face of rising interest rates and living costs.

Jenny Kasongo wearing a colourful shirt looks into camera.
Jenny Kasongo, pictured in eastern Helsinki's "Blueberry Land" on 23 May 2023, is a member of the National Union of University Students in Finland (SYL), where she works on issues regarding student income. Image: Petteri Juuti / Yle
Yle News

Jenny Kasongo, a 27-year-old student, says she sometimes wonders how much money she has already spent on rent.

"I come from a working-class family and have an immigrant background. I have been living in rented apartments with my parents since childhood and now on my own," Kasongo told Yle.

Kasongo is currently in her fourth year as a sociology student at the University of Helsinki.

"Because I want to stay in Finland, I would like to have something permanent here, like an apartment. It's something I can pass on to my own family or relatives when I'm gone," she explained.

Kasongo is one of the readers who responded when Yle asked people about their experiences with student loans and how it impacted their plans to buy a home.

Last month, figures from benefits agency Kela showed the median Master's student loan burden tripling over the past decade. The average student loan debt for graduate students is now 22,600 euros, up from 6,700 euros in 2010.

The 30 responses received by Yle suggest that some students harbour deep anxiety about their finances. Some of the respondents have accumulated a significant amount of debt, which they say makes saving for a down payment completely unrealistic.

A snowballing surprise

A student loan can become an unexpected burden when fresh graduates start working and apply for their first mortgage.

Kasongo is facing around 21,000 euros in loans both from her studies at the university and polytechnic levels. While the amount she owes is not small, it is not close to the largest amount among those who responded to Yle.

Students who complete their higher education within a prescribed time frame are eligible to deduct a third of the amount owed from their taxes.

Kasongo, however, will not be eligible for this benefit since she switched from a polytechnic school to a university in the middle of her studies. This means she will have to repay her loan in full at some point.

She said she was startled by the rapid rise in interest rates that began last year, adding that the loan would be impossible to repay without the guarantee of a job after graduation.

The interest rate increased by over 100 percent in May. I didn't realise it could change so significantly.

Social worker, 38 years old, outstanding student loan of 18,500 euros.

The bank had set totally unrealistic initial payment goals in regard to my income.

College dropout, 30 years old, outstanding student loan of 19,000 euros.

Secure employment in a well-paid profession brings a sense of security.

Dental student, 26 years old, outstanding student loan of 35,000 euros.

No other group of people is forced to take out loans.

Cosmetologist, 26 years old, outstanding student loan of 21,000 euros.

I bought my first home towards the end of my first degree, but I had to sell it when I changed careers. When loan repayments start, I've probably fallen off the property ladder for the rest of my life.

Hospitality worker, 36 years old, outstanding student loan of 55,000 euros.

A sociology degree does not result in a specific profession. At the same time, qualifying for a mortgage hinges on the type of job one secures and how well it pays.

"It's possible that I could have the opportunity to buy an apartment in Helsinki 10-20 years after graduation," Kasongo said.

At that point she would be close to 50 years old. She told Yle she dreams of owning a home in eastern Helsinki, even though prices there are on the rise.

For now, Kasongo says she puts small amounts of money away in an ASP account, a state-backed housing loan system.

The highlighted sections are excerpts from the responses Yle received last month when asking how student loans impact housing aspirations.

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