Student loans and time to graduation - A study of recent Finnish policy reforms

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School of Business | Master's thesis

Date

2024

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Mcode

Degree programme

Economics

Language

en

Pages

61

Series

Abstract

This research paper investigates the impact of Finland’s 2014 Student Loan Compensation Policy on higher education students. The policy aimed to encourage students to accelerate their study progress by increasing the availability of government-subsidized loans and providing a cash-back incentive for timely graduation. Under the policy, students graduating on time can get up to 6000 euros of their outstanding student debt paid off by the government. Analyzing data from 2010 to 2016 within a difference-in-difference framework, the study finds a significant rise in student loan uptake post-policy. The effects on educational and employment outcomes are small. Heterogeneity analysis reveals that the policy had a larger effect on students in academically oriented programs than professionally oriented schools. University students took more loans and accumulated more credit points in the first three semesters. Variations based on fields of study and parental background suggest that business students and those from higher-income families might have benefited the most.

Description

Thesis advisor

Domnisoru, Ciprian

Keywords

student loans, policy, policy evaluation, difference in differences

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