The Student Union opposes the proposal to cut housing benefits for students. The proposed housing supplement model treats students unfairly compared to other groups eligible for housing benefits. The proposed changes to student financial aid and housing support significantly hinder the primary task of students which is studying itself. The Student Union supports the move towards more individualized support that maintains or increases housing benefits for certain student groups. Additionally the already implemented cuts to investment subsidies for special groups mean that there are fewer affordable housing options available for the growing number of students.
The legislative proposal is a severe cut to students' social security
Implemented in this manner the transition to the housing supplement represents a severe cut to the majority of students. Along with the cut to the general housing allowance (effective from April 1, 2024) the transition to the housing supplement under the proposed model will cut approximately one hundred euros per student financial aid month from the housing benefits of a student without a family in a short time. This amount is significant considering the non-loan portion of student financial aid. In the future a student in Turku would receive a maximum housing supplement of 248 euros (municipality class II) and a student in Pori or Rauma 216 euros (municipality class III). The proposal is particularly harsh for students studying in Pori as the city is downgraded to municipality class III which most significantly reduces the housing benefits for Pori students.
Under the proposed model the housing supplement and student grant together barely cover the cost of living.
The link between student financial aid months and the housing supplement is problematic in many ways
A key problem with the housing supplement besides its currently lower level is that it ties students' housing benefits back to the months of student financial aid. In reality this link results in an even greater loss of housing benefits on an annual basis. The Student Union is particularly concerned about the proposal's impact on students' livelihoods during the summer months. The link between the housing supplement and student financial aid creates additional financial strain for students during the summer. Not all students have the opportunity to find summer jobs or have a safety net. In some disciplines there are also no relevant study opportunities available during the summer. Moreover using student financial aid to compensate for the lack of summer jobs depletes the already limited number of student financial aid months especially if it is not possible to complete relevant courses during the summer. This could result in the aid months running out earlier potentially causing further interruptions to studies due to the two-tier support system. Currently the number of student financial aid months available is also significantly lower than when the housing supplement was last in use. The Student Union believes that if the transition to the housing supplement occurs the number of student financial aid months should be increased. According to the view we received from Kela (the Social Insurance Institution of Finland) the number of aid months is insufficient and even now alongside the general housing allowance the insufficiency of aid months has been observed to prolong the time required to complete degrees.
Additionally the problem with tying housing benefits to student financial aid months is that in certain cases such as when income limits are exceeded the student must repay not only the student financial aid but also the housing benefit including interest to Kela. Therefore, the housing supplement should also be separated from student financial aid in this regard.
The housing supplement does not address rising living costs and increases student indebtedness
The Student Union considers it important that the housing supplement is tied to the cost-of-living index, but this should be done immediately if the proposal is implemented. Living costs are likely to rise in the three years before the proposed transition to the housing supplement (starting August 1, 2025). Considering the freeze on the indexation of the student grant the purchasing power of the social security that secures students' primary occupation studying, is constantly falling behind. The student grant and housing supplement together do not cover even the costs of the most affordable market-priced housing let alone food expenses.
In practice the proposal increases the pressure on students to work alongside their studies which also diverts resources away from the studies themselves and lengthens the time required to complete degrees. The proposal also increases student indebtedness and there is no reason to believe that the average student loan debt of a graduating master's student will not continue to rise rapidly from the current level of approximately 20,000 euros. Due to the increase in the maximum amount of student loans per aid month it is entirely realistic to predict that the average student loan debt of students starting in the transition year to the housing supplement will be around 30,000 euros at the time of graduation. These amounts are already so large that their impact on lifetime earnings needs to be investigated.
The goals of the legislative proposal and the realities of the housing market do not align
The housing supplement has an inherent incentive to favor shared housing. While the goal is noble student housing construction and other construction over the past decade have increasingly favored studio apartments which means that transferring students to a lower benefit level will not suddenly create more existing shared housing opportunities.
Investment subsidies that support the construction of housing for special groups, such as students, have also been cut during the current government term. The decision to freeze new construction projects and renovations by existing student housing foundations could potentially halt them for years. Over the past decade, student housing has been significantly converted from shared apartments to studios and the ready-made shared housing solutions favored by the housing supplement no longer exist because there has been no demand for them. However the need for housing continues to grow and the cut in investment subsidies may lead foundations to seek private bank financing which would likely raise rent levels.
The proposed housing supplement is not a reasonable direction given the current housing market trends and leaves students in a difficult situation. Combined with the growing number of students the increasing demand for affordable housing and the frozen construction of specially supported housing the problems of the coming years are tangible. Some students will undoubtedly find good shared housing solutions but the question is whether there will be nearly enough affordable studios or suitable shared apartments available at a price that students can afford. Even now there is an insufficient number of available units in large student cities like Turku. Certain student groups such as international students are already in trouble and will continue to be in the future because student housing foundations do not have enough affordable housing to offer the growing number of domestic or international students. Additionally in the private rental market international students' chances of finding housing before they have obtained a Finnish bank account or a Finnish social security number are very slim.
The Student Union believes that the government's goal of a comprehensive reform of student financial aid during this term is once again in danger of slipping into merely adjusting the different elements of student financial aid without assessing the overall impact on student social security.
The proposal complicates student housing benefits
This housing supplement model complicates the social security of students and increases the likelihood of students jumping between different housing benefits depending on their life situation. For example a student who starts their studies will be on the general housing allowance but if they become seriously ill such as with mental health issues they can apply for sickness allowance in which case they will also receive the general housing allowance. When the student recovers and returns to studies they will again be eligible for the lower student financial aid and housing supplement. If a student’s ability to study diminishes during their studies and they fail to earn the required number of credits monitored by Kela they may again qualify for higher basic social assistance and housing allowance until they complete their bachelor’s degree and return to the lower level of student grant and housing support. One example of this situation is a first-year student who must rely on student financial aid and the housing supplement during the summer and they run out of aid months before completing their bachelor's degree. Although basic social assistance and housing allowance are possible benefits under certain conditions the stress caused by this situation is unreasonable for students. Not all students are able to secure their livelihood by working during the summer for example due to health reasons or the demanding nature of their studies.
The Student Union believes that the proposal to move students to the housing supplement is also in contradiction with the government's own goals of increasing the number of higher education graduates. The combined cuts to housing benefits and investment subsidies weaken the financial situation of students and reduce the opportunities for those in financially vulnerable positions to pursue higher education. From the perspective of educational equality the situation is at least problematic.
Conclusion
The cuts hit hard on a specific group and individual students whose social security is already weaker compared to other population groups. The proposal recognizes the vulnerability of students with families but otherwise the legislative proposal is harsh for students and shifts a significant problem onto them to solve.