Assistance with student loan interest: A record number of recipients in 2024

The number of recipients of assistance with student loan interest payments began to increase substantially in 2023 as a result of rising interest rates and higher debt loads. The trend continued in 2024, with the number of assistance recipients climbing to over 16,000.

“This is more than twice the number in 2023”, says Ilpo Lahtinen, a Special Coordinator in Kela’s Student Financial Aid Section. “You have to go back to the economic depression of the 1990s to find a similar number of assistance recipients”, he says.

People with student loan debt can get assistance with their interest payments if their income does not exceed a specified limit. Interest assistance is available starting from the time the bank begins to charge interest on the loan. This is typically about one year after the last payment of financial aid. If a customer is granted interest assistance, Kela pays the interest due on the state-guaranteed student loan as well as the bank's notification fees for a period of six months. The customer does not have to pay the assistance back to Kela, but they must still repay their loan to the bank.

Average amount of interest assistance is more than EUR 550

In 2024, a total amount of EUR 9 million was spent on interest assistance, over EUR 6 million more than the previous year. The average amount of interest assistance paid for loan interest and fees was EUR 553. The corresponding average for 2023 was EUR 355.

Lahtinen says that the higher average is a sign of rising interest rates and higher student loan debt loads. People who earned a master’s degree in 2023 typically graduated with EUR 23,800 in student loan debt.

“The interest assistance provides important and useful support in a weak labour market. Many new graduates have little income right after graduation because they may have a hard time finding work. They should therefore find out if they might be eligible for interest assistance”, says Lahtinen.

Interest assistance can be paid to the customer or directly to the bank

Kela pays the interest assistance to the bank or to the customer. If paid to the customer, applications for assistance with student loan interest for the second half of 2024 must be submitted by 28 February 2025. The deadline for assistance with student loan interest for the first half of 2025 is 31 August 2025.

If paid directly to the bank, applications for the first half of 2025 must be filed by 5 June 2025. The deadline for applications for the second half of 2025 is 5 December 2025. Kela's website includes instructions on how to apply for interest assistance.

“It is our hope at Kela that the interest assistance programme is updated soon. The eligibility rules should be revised so as to make it possible in all cases to pay the assistance directly to the bank. The rules should also better fit situations where interest is due monthly. Under the current rules, applications can only be submitted semiannually, which means that someone with student loan debt may first have to pay the bank interest and only then apply to Kela for interest assistance”, Lahtinen says.