Student loan compensation

A student loan compensation is a tax-free form of financial aid for students paid by Kela. You may be eligible for the compensation if you have started your first course of study at a university on or after 1 August 2014. A student loan tax deduction is applicable to university students who have started their first course of study at a university before 1 August 2014.

A student loan compensation is a form of financial aid offered by Kela to students who have taken out a student loan.

A student loan is an easy way to finance your life while studying. The average loan interest is low, and you can agree on the repayment schedule flexibly based on your circumstances and repayment capacity after you have completed your studies. You won’t need any collateral or guarantors for a student loan because the Finnish state will guarantee the loan for 30 years.

How much is the student loan compensation?

  • The student loan compensation may amount up to thousands of euros, depending on how large your student loan is. At best, you may get significant relief on your loan repayments after you graduate.
  • The amount of the student loan compensation is 40% of the amount of your outstanding student loan exceeding 2,500 euros. If you qualify for the student loan compensation, Kela will usually pay the compensation directly to your bank as an extra repayment towards your student loan.

Who is eligible for the student loan compensation?

You are eligible for the student loan compensation if:

  • you have started your first course of study at a university on or after 1 August 2014
  • you complete your degree within the target time and
  • you have an outstanding state-guaranteed student loan totalling more than 2,500 euros.

To qualify for the student loan compensation, you must complete a bachelor’s or master’s degree at a university or a university of applied sciences. You can only get compensation for the first degree you complete.

The applicable target time depends on the degree you are pursuing and its extent. In most cases, the target time is calculated by adding a maximum of one academic year to the standard time determined for completing the degree. If you can’t complete the degree within the target time, the target time may be extended if your studies have been prolonged for an acceptable reason (such as a military service, having a child, being ill etc.).

Here are five examples of student loan compensations paid by Kela:

Student loan compensation
Outstanding student loan amountStudent loan compensationRemaining loan amount
EUR 18,000EUR 6,200EUR 11,800
EUR 12,800EUR 4,120 EUR 8,680
EUR 10,800EUR 3,320EUR 7,480 
EUR 7,500EUR 2,000EUR 5,500 
EUR 5,000EUR 1,000EUR 4,000 

There is a maximum limit to the amount of the student loan compensation you can get, and it is determined based on the extent of the university degree you are pursuing. If you complete your degree abroad, the maximum loan amount counted towards the compensation is higher.

Getting the student loan compensation is easy: you don’t usually even need to apply for it separately, as Kela will make the decision automatically after you have completed your degree. Further information on exceptions and on how to apply for the compensation then is available from KelaOpens new window.

Visit Kela’s website to find many practical examples and a calculator for estimating the amount of the compensation you might qualify for. If you can’t find an answer to your question, you can contact Kela directly.

What is a student loan tax deduction?

You may also have heard someone talk about a student loan tax deduction. It is a tax deduction only applicable to students who have started their first course of study at a university before 1 August 2014. It allows eligible students who make student loan repayments to the bank to pay less taxes.

Read more about the student loan tax deduction on Kela’s website.Opens new window

What is a student loan?

A student loan is an affordable and safe option for students, which you don’t need to repay until after you finish your studies.

Read more about student loan

Benefits for university students

We offer a wide range of services and benefits to students. Sign up as a university student customer to get the best prices and benefits.

Read more about the university student customer relationship

Why is it smart to save?

If you have enough money to live on and something left over at the end of the month, the smart thing to do is to start saving.

Read why it is smart to save