Student loan compensation 2026: why 40 per cent is really 14
Published · Updated · Author: Palvemax OY
A higher-education student in Finland can draw €850 a month of student loan, nine months a year. Over a three-year degree that is €22,950. The compensation is forty per cent of the part exceeding €2,500, so it ought to come to €8,180.
In reality Kela pays at most €3,320. The gap comes from a second limit: only €400 a month of loan is counted towards the compensation, not the €850 you were allowed to draw. Over a three-year degree that means €10,800 is counted, not the whole loan. Forty per cent becomes about fourteen per cent of the actual debt.
- 40 %
- of the counted loan above €2,500
- €400/mo
- maximum loan counted
- €850/mo
- drawdown limit since 1 Aug 2024
- €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: €850 for an adult studying in Finland since 1 August 2024, €650 before that. The compensation limit says how much of that loan is counted when the compensation is calculated: €400 a month. A higher drawdown limit therefore does not raise the compensation.
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 | Deadline | Loan counted | Maximum compensation |
|---|---|---|---|---|
| 180 cr, bachelor’s | 3 yrs | 3.5 yrs | €10,800 | €3,320 |
| 210 cr, UAS | 3.5 yrs | 4 yrs | €12,800 | €4,120 |
| 240 cr, UAS | 4 yrs | 4.5 yrs | €14,400 | €4,760 |
| 270 cr, UAS | 4.5 yrs | 5 yrs | €16,400 | €5,560 |
| 300 cr, master’s level | 5 yrs | 6 yrs | €18,000 | €6,200 |
| 330 cr, master’s level | 5.5 yrs | 6.5 yrs | €20,000 | €7,000 |
| 360 cr, master’s level | 6 yrs | 7 yrs | €21,600 | €7,640 |
The last column is Kela’s published maximum, and it matches the formula exactly. Master’s level means a bachelor’s plus a master’s, or a master’s-level degree alone, such as a master’s or the licentiate in medicine. 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, the degree is completed by the deadline and you have more than €2,500 of student loan from your higher-education studies. The deadline is the target time set by the degree’s size (60 credits is one academic year) plus half an academic year for a UAS degree or a bachelor’s alone, and plus one academic year for a bachelor’s and master’s or a master’s-level degree alone. A 210-credit UAS degree therefore has a deadline of 4 academic years, and a 300-credit master’s of 6.
The deadline runs from the start of the term in which you accepted your first higher-education place. Extra time is granted in certain situations – military service, a period on parental allowance or long illness among them.
Missing the deadline costs exactly the compensation. On the €22,950 example loan that is €3,320, and on a ten-year repayment plan at four per cent the monthly payment rises from €199 to €232. The deadline already includes half a year or a full year of slack over the target time, but overrunning it by a single term cancels the whole compensation.
| Situation | Compensation | Left to repay | Monthly payment |
|---|---|---|---|
| Graduated by the deadline | €3,320 | €19,630 | €198.74 |
| Deadline missed | €0 | €22,950 | €232.36 |
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.
- Since 1 August 2024 the state guarantee is €850 a month for an adult studying in Finland, €400 for a student under 18 and €1,000 for a student abroad.
- 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, a 210-credit UAS degree €4,120 and a 300-credit master’s €6,200.
What is the deadline for the student loan compensation?
The degree’s target time plus half an academic year for a UAS degree or a bachelor’s alone, or plus one academic year for a bachelor’s and master’s or a master’s-level degree alone. For example 180 credits: 3.5 academic years, 210 credits: 4, 300 credits: 6. It runs from the start of the term in which you accepted your first higher-education place.
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 €850. Over a three-year degree €10,800 is counted even if €22,950 was actually drawn.
How much student loan can I draw per month in 2026?
The state guarantee is €850 a month for an adult studying in Finland, €400 for a student under 18 and €1,000 for a student abroad. The amounts rose on 1 August 2024; before that the limit for adults was €650. The compensation still counts at most €400 a month.
What are the conditions?
Your first higher-education place was accepted on or after 1 August 2014, the degree was completed by the deadline, and you have more than €2,500 of student loan from your higher-education studies. The deadline can be extended for military service or a period on parental allowance, among others.
Do I have to apply for the compensation?
Usually not. Kela checks eligibility automatically once the institution reports the completed degree, and pays it straight to the bank as an extra repayment. A separate application is needed, for example, after a bachelor’s degree at a university.
When is the compensation paid?
If you graduated in the autumn term (1 Aug–31 Dec), Kela usually decides and pays in April; if you graduated in the spring term (1 Jan–31 Jul), usually in November. The money goes straight to the bank and reduces the loan.
What does graduating late cost?
The entire compensation, if you miss the deadline. On the €22,950 example loan that is €3,320, which on a ten-year plan raises the monthly payment from €199 to €232.
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.