The Student Union of Tampere University (TREY) condemns the Finnish Government’s budget proposals on index freezing of student grants and cuts to housing allowance. The combined impact of the cuts proposed in the budget session on students is disproportionate and serious, and will increase the risk of poverty among students.
Study grant
The index freezing of study grant is calculated to strengthen the state budget by around €59 million in 2027. The significance in next year’s state budget is negligibly small compared to the personal disaster that indexation will cause for the living standards and study opportunities of many students. The cuts clearly show a lack of understanding of what the index freeze means for students.
For years now, grants given to students have been well below the poverty line. Poverty is a major factor in mental health deterioration. It is contradictory and absurd in terms of staff resources that a huge amount of work is being done on student welfare and mental health by various authorities and organisations, when one of the major root causes of mental health problems among students is poor income. The biggest mental health benefit for students would be stable and sufficient student grant. Anything else is patching up the suffering of living on the poverty line.
Student loan
On Friday, September 22, 2023, the government has issued the government’s proposal to the parliament on amending the study support act into law. The bill proposes to increase the state guarantee of the student loan from the current 650 euros to 850 euros. If the student has to take out a full student loan for the entire duration of his studies, the student would have 38,250 euros in debt upon graduation. The proposal to raise the student loan in response to the unreasonably low income of students is thoughtless and will cause long-term damage to the current generation of students.
Students have long been forced to supplement their low income with student loans. Total student loan capital has tripled in 10 years. Today, the national student loan capital stands at almost €6 billion. That’s half the amount that the Government will be taking loan next year in total. If the parliament approves the law presented now on increasing student loans, the total capital of student loans will explode from the current level. So you could say that the Finnish state is shifting the burden of the collective debt to individual students, most of whom are under 25 years old.
In 2023, students will have an average debt of almost €11 000. This will have a major impact on the ability of current students to apply for a mortgage or take out a loan to start a business, for example.
Students are taking a huge personal risk by having to live with a loan. This risk has been systematically downplayed by saying that a student loan is effectively a free loan, which is not the case, as we have seen with the rise in interest rates. No other group entitled to social security is forced to finance their essential living costs with a personal loan. The answer to the rise in the cost of living caused by inflation is not student debt trap, but an increase in student social security.
Housing
On average, students will see their general housing allowance cut by €76 per month. The cut in the general housing allowance will cause huge problems for students and university towns alike. In Tampere, for example, only about one in four students has affordable student accommodation. This means that when housing support is reduced, moving to cheaper accommodation is not possible because there is no affordable housing available to meet the demand. So we ask politicians what these students should do in the future if they cannot afford to live in the town they are studying in?
Students cannot win even by working while studying. The abolition of the €300 protection component of the general housing allowance, combined with cuts in student grants and housing allowance, will be extremely destructive to students’ opportunities to study. When students are almost forced to work alongside their studies in order to secure the necessary income, they are penalised with a bill or loss of housing benefit if they earn more than €500 per month. This decision conflicts with the way in which the income thresholds for student grants have been raised in recent years in response to the need to strengthen students’ livelihoods.
Education and university funding
As recently as the spring 2023 parliamentary election campaign, Prime Minister Orpo said that education was under special protection from cuts. Students sighed for relief due to this statement. But now it has become clear that once again students will be among the firsts to see their livelihoods weakened in the name of limiting government loaning. A cut from students is a cut from education, and cuts from education are disastrous to Finland’s future.
The universities’ basic funding is largely tied to the number of students graduating. The drastic reduction in student income will affect the rate at which students graduate, as more of the time available for studying will be spent working. Universities should also be very concerned about this development. This will particularly affect future generations of students as the financial situation of universities weakens.
Demands
The Student Union of Tampere University demands that the Orpo-led Government cancel the cuts to student livelihood. This is essential for the wellbeing and future of current and future students.
Tampere University campuses will be occupied from Monday 25 September 2023 onward, and we support these occupations. We encourage all students to take part in the occupations and speak out for their livelihood!
More information
Vice Chair of the Board Onni Härkönen (onni.harkonen@trey.fi, 044 729 3775)
Secretary General Adam Zeidan (paasihteeri@trey.fi, 050 361 2854)