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Students increasingly taking out student loans

University and post-secondary students in Finland are increasingly taking out student loans. According to the Bank of Finland student loan debt has grown by nearly 30 percent over the past couple of years.

Mies seisoo raha-automaatin edustalla.
Image: Tiina Jutila / Yle

According to fresh figures from the Bank of Finland, university and post-secondary students have borrowed some 340 million euros so far this year. The figure for all of last year was 307 million euros and in 2014 students borrowed about 221 million euros in student loans.

During the past two years, student loans increased by nearly 30 percent to a total of some 2.3 billion euros.

Government loan reforms behind increase

The Bank of Finland says that one reason behind the growth was government reforms to student loan plans.

After the reforms went into effect, the Finnish state began to pay a portion of the loans of those who finish their studies on time.

The reforms were meant to increase the amount of loans being taken out, and apparently the measure worked.

Low interest rates, low job prospects

Another reason for the increase in the popularity of student loans is the current low interest rates. In September student loans were granted at annual interest rates of 0.67 percent.

The average interest rate for loan portfolios was 0.75 percent, compared to an interest rate of 1.32 percent two years ago.

Also lack of part-time and summer jobs was also a factor in the increase, the bank said. When summer jobs are difficult to come by students are apparently choosing to study and take out loans instead.

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