Student loan compensation 2026 — why 40 per cent is really 19
A higher-education student in Finland can draw €650 a month of student loan, nine months a year. Over a three-year degree that is €17,550. The compensation is forty per cent of the part exceeding €2,500, so it ought to come to €6,020.
In reality Kela pays €3,320. The gap comes from a second limit: only €400 a month of loan is counted towards the compensation, not the €650 you were allowed to draw. Over a three-year degree that means €10,800 is counted, not the whole loan. Forty per cent becomes nineteen per cent of the actual debt.
- 40 %
- of the counted loan above €2,500
- €400/mo
- maximum loan counted
- €650/mo
- higher-education drawdown limit
- €3,320
- compensation for a 180-credit degree
Two ceilings that pull in different directions
The student loan system has two separate euro figures, and they are constantly confused. The drawdown limit says how much loan Kela guarantees per month: €650 for a higher-education student. The compensation limit says how much of that loan is counted when the compensation is calculated: €400 a month.
Months are counted at nine per full academic year and five per half year of the degree’s target time. A three-year degree gives 27 months, and 27 times €400 is €10,800. From that the €2,500 threshold is deducted, and forty per cent of the remaining €8,300 is paid — €3,320.
| Degree | Target time | Loan counted | Maximum compensation |
|---|---|---|---|
| 180 cr (UAS) | 3 years | €10,800 | €3,320 |
| 210 cr (UAS) | 3.5 years | €12,800 | €4,120 |
| 240 cr | 4 years | €14,400 | €4,760 |
| 300 cr (master’s) | 5 years | €18,000 | €6,200 |
| 360 cr | 6 years | €21,600 | €7,640 |
The last column is Kela’s published maximum, and it matches the formula exactly. So if you have drawn loan at the full monthly limit, the compensation does not grow with it — it stops at the ceiling of countable loan.
The conditions turn on timing
You qualify if your first higher-education study place was accepted on or after 1 August 2014 and the degree is completed within the target time. The target time follows the size of the degree, and extra time is granted in certain situations — military service, parental leave or illness among them.
Finishing late costs exactly the compensation. On the €17,550 example loan that is €3,320, and on a ten-year repayment plan at four per cent the monthly payment rises from €144 to €178. One extra semester can therefore cost more, month for month, than a whole academic year’s rent.
| Situation | Compensation | Left to repay | Monthly payment |
|---|---|---|---|
| Graduated on time | €3,320 | €14,230 | €144.07 |
| Graduated late | €0 | €17,550 | €177.69 |
How much loan is worth drawing
The compensation is calculated on the loan actually drawn, but at no more than €400 a month. That yields a practical rule: if you are going to draw student loan at all, draw at least €400 a month. Anything below that reduces the compensation directly, and anything above it adds nothing.
Over a three-year degree, €400 a month means a €10,800 loan and a €3,320 compensation. Draw only €250 a month and the loan comes to €6,750 with a compensation of €1,700. You drew €4,050 less and gave up €1,620 of compensation — which had been covering forty per cent of that loan. You do not have to spend the money: it can sit in savings and repay the loan the moment you graduate.
Interest during studies and after
During studies you usually do not pay the interest yourself: it is capitalised, meaning added to the loan principal, or the state pays it as an interest subsidy for a low-income borrower. Capitalised interest does not increase the compensation, because the compensation is calculated on loan drawn, not on interest.
Repayment typically starts about two years after graduation, on a schedule agreed with the bank. A student loan usually carries a lower rate than consumer credit, because Kela guarantees it and the bank carries no default risk. That is why paying a student loan off quickly is not a priority if you also have more expensive debt.
- The student loan tax deduction is a different thing from the compensation, and it applies to those who started before 1 August 2014 — it reduces tax, not the loan.
- The drawdown limit is €650 a month for a higher-education student and €300 for an upper-secondary student.
- You do not have to draw the full limit — draw less and the compensation is still calculated with the same formula.
- If the loan stays under €2,500, no compensation is paid at all.
- Kela can reclaim a compensation paid without grounds if the degree information later changes.
Calculators for this topic
FAQ
How much is the student loan compensation?
40 per cent of the counted loan exceeding €2,500. The counted loan is at most €400 a month over the degree’s target time, so a 180-credit degree earns at most €3,320.
Why is my compensation less than 40 per cent of my loan?
Because only €400 a month of loan is counted, while the drawdown limit is €650. Over a three-year degree €10,800 is counted even if €17,550 was actually drawn.
What are the conditions?
Your first higher-education place was accepted on or after 1 August 2014, the degree was completed within the target time, and more than €2,500 of countable loan exists. Extra target time can be granted for military service or parental leave, among others.
Do I have to apply for the compensation?
No. Kela checks eligibility automatically once the institution reports the completed degree, and pays it straight to the bank as an extra repayment.
What does graduating late cost?
The entire compensation. On the €17,550 example loan that is €3,320, which on a ten-year plan raises the monthly payment from €144 to €178.
Should I pay off a student loan quickly?
Not necessarily. A student loan usually carries a lower rate than other debt because Kela guarantees it. If you also have more expensive debt, pay that first.