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Education Ministry eyes cuts to student financial aid

Education Ministry officials are considering a proposal to reduce the level of student financial aid for university students. A white paper outlining reforms to the student financial aid system also proposes restricting the duration of study grants to a maximum of 4.5 years.

Sanni Grahn-Laasonen
Education Minister Sanni Grahn-Laasonen. Image: Jussi Mankkinen

The report was commissioned by Education Minister Sanni Grahn-Laasonen and aims to find ways to achieve the government’s target of a 70 million-euro reduction in spending on student financial aid by 2019.

Titled "Reform of Student Financial Aid", the paper proposes reducing study grants for university students to the same level paid out to secondary level students, or from 336 euros per month to 250 euros.

Income limits for grants would remain unchanged, but they would be indexed, which means that they would have to be reviewed annually.

The reform programme also calls for the maximum period for receiving the grant to be restricted – otherwise the grant itself would have to be further slashed to meet the government’s savings target. In practice eligible students would receive financial support for the time required to complete a single degree programme comprising 300 credits, or 45 months.

The maximum duration for financial aid for all university degree programmes would be set at 54 months. According to the author of the proposal, Roope Uusitalo of Jyväskylä University’s School of Economics, this approach would also ensure financial support for students completing degree programmes at Universities of Applied Sciences.

3 + 2 model proposed

Uusitalo also tabled an optional 3 + 2 model in which the period for study grants would be limited to three years. In this scenario, students completing undergraduate programmes would receive study grants while post-graduate students would receive financial support from other sources.

Policy makers believe that the advantage of this model is that it would allow students to focus on the early stage of university education backed by a secure financing. However Uusitalo said that it is not very well suited for candidates studying at universities of applied sciences or vocational institutions.

He also proposed more radical approaches including personal social accounts and a basic income.

Support for student loans

Uusitalo advanced credit as a means of covering expenses incurred during study programmes. He called for the state to increase its student loan guarantee to ensure that students would receive a total of 1,100 euros from study grants, housing assistance and student loans.

On top of the total recommended study period, students could also be granted financial aid for an additional 18 months to make sure that they complete their programmes.

In addition to saving 70 million euros by 2019, the government also said it wants to cut spending on student financial aid by 150 million euros over the long term. The cabinet will discuss the proposals in the white paper in March.

As she received the report, Education Minister Sanni Grahn-Laasonen said that she would like to ensure that all students have an equal opportunity at education.

"I believe that the cuts are difficult and I find them unpleasant. On the other hand we know that the painful austerity decisions already made are not enough to cover our debt," the minister added.

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