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

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Journal Title
Journal ISSN
Volume Title
School of Business | Master's thesis
Date
2024
Major/Subject
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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