On financing studies

The discussion around students and whether or not the subsidies they receive rages on again in Finland. One Finnish blog posting by a local student politician went on to complain about how "students are one group of people who are forced to fund their life with debt." Apparently this was a reply to some other comments, which supposedly suggested that students were taking too long to graduate and that "25 year olds are able to get subsidies while doing just about nothing."

Currently the situation is that Finnish students get a 298 euro subsidy from Kela for studies. Additionally Kela subsidizes living costs by 80% and up to 201.6 euros per month. Additionally the state ensures that each student is able to get an additional 300 euros of loans per month. So for an average student living in an apartment that costs over 252 euros a month in rent the state shells out 499.6 euros and an additional 300 euros in guaranteed loans. Students are also eligible for student housing, which is apparently roughly ~200-300 euros for shared apartments (students get their own rooms and share common facilities) or ~300-400 euros for studio apartments. Assuming that the student uses the exact 252 euros for housing, that means that from the 499.6 euros they will have 247.6 euros or 547.6 euros with the debt. With this type of setup the student is allowed to have incomes of up to 11850 euros per year, meaning that if the student studied full time and worked only during the three months of summer vacation, they would be allowed to earn a monthly salary of up to 3950 per month. Or if spread out evenly over the year, the student could earn 987.5 euros per month.

So, assuming that the student is able to employ themselves so that they earn the maximum of 11850 euros per year, it means that in total, including the debt, they are able to accrue 19046.4 euros per year, or an average of 1587.2 euros per month from which they still have to pay all costs of living, including housing.

Alternatively, if we assume that a student is able to tackle a job that pays 10 euros an hour and works 10 hours a week through the semester and 37.5 hours a week during summer, then the income would be 3600 euros during the semester and 4500 euros during summer for a total of 8100 euros of auxiliary income and an average of 1274.7 euros per month including subsidies and debt.

The student gets the above mentioned subsidies for 9 months every year, meaning that in 5 years time they will have used up 45 months of subsidies and accrued 13500 euros of debt (not including interests). At this point of time the student is eligible for tax deductions of 3300 euros as they were able to graduate on time. This essentially means that on graduation, the student now has 10200 euros of debt.

At this point I'm starting to wonder what all the complains are about. If you are willing to put in a bit of work, you are able to get a decent standard of living during your studies while accruing a relatively modest sum of debt. Sure, some may argue that the above scenarios are unrealistic. In my personal experience, for instance, I have entirely foregone state subsidies after my first ~year and a half of studies and financed my studies through working first part-time and then full-time and as of now it appears that I will be graduating in about 6.5 years. Out of those 6.5 years I've worked full time for about four years. During that time I have not accumulated any debt from studies. This may again be slightly unfair as I may be an outlier, but it just goes to illustrate that there are many different possibilities to finance one's studies.

Overall, however, even in the above scenarios, the student should be fairly well able to live off of the current system and further increase their level of living with a minimal amount of work. Even if the student takes the maximum amount of debt, the result is relatively small and the state continues to subsidize through tax discounts. Now, considering that studies are typically an investment in yourself which in turn offers a wider array of choices in regard to lines of work and also often increase your ability to earn money in the future, it still seems a relatively simple choice.

And regarding debt, there are again a few ways to look at it: if you don't want to finance your studies with debt, there are other alternatives as well. Then again, putting up some debt is a good statement in regards to commitment to your studies.