Student loan compensation / Student loan tax deduction

Name of the instrument - Local language: Opintolainahyvitys / Opintolainavähennys
Name of the instrument - English translation: Student loan compensation / Student loan tax deduction
Scheme ID: 221
Country: Finland
Reporting year: 2020
Type of instrument: Tax incentive for individuals
Sub-type of instrument: Tax support for families and their costs for education
Type of entry: Single instrument

Short description: If an individual taxpayer completes a higher education degree within the targeted time, a portion of the student loan will be compensated, either as a student loan compensation or as a student loan tax deduction, depending on when the education was started. The goal of the scheme is to encourage students to graduate within the target time. The student loan compensation is 40% of the qualifying debt exceeding EUR 2 500. The student loan tax deduction is 30% of the qualifying debt exceeding EUR 2 500.

Level of operation

National

Name of a part of the country

Not applicable

Name of the region (for regional instruments)

Not applicable

Name of the sector (for sectoral instruments)

Not applicable

Relevance

Further instrument

Legal basis

Opintotukilaki ('Act on Student Financial Aid')

Objective(s) and target(s)

To encourage students to graduate within target time

Year of implementation

2005

Operation/management

The Social Insurance Institution of Finland (KELA) manages the student financial aid system, hence also the study loan compensation / tax deduction. Higher education graduates who finish their degree studies within target time, and who took up a study loan along the way, are eligible for loan compensation or tax deduction. The study loan compensation is a repayment made by KELA. It only applies to students in higher education who have started their first higher education studies on 1 August 2014 or later. If the first higher education studies was started before 1 August 2014, the graduate is entitled to a study loan tax deduction. When the higher education degree is completed within the target time and repayments are made on the study loan, the personal income tax is reduced by an amount equalling the amount of the student loan tax deduction. As a rule, it is granted without application, but there are some exceptions to this.

Eligible group(s)

Higher education graduates who completed their degree within target time.

Group(s) with preferential treatment

No preferential treatment

Education and training eligible

Higher education

Source of financing and collection mechanism

State (loss of tax revenue)

Financing formula and allocation mechanisms

The student loan compensation is 40% of the qualifying debt exceeding EUR 2 500. The student loan tax deduction is 30% of the qualifying debt exceeding EUR 2 500.

Volumes of funding

Not available

Beneficiaries/take up

Not available

Organisation responsible for monitoring/evaluation

The Social Insurance Institution of Finland (KELA)

Monitoring/evaluation reports available

Not available

Most relevant webpage - in English