Popularity of student loans plummeting
The total amount of student loans taken out each year has continued to decline drastically, with only seven million euros taken out from commercial banks this year, more than six times less than the peak of 43 million euros in 2008.
Mart Siilivask, a spokesman for Swedbank, told Eesti Päevaleht one reason is free higher education, which was implemented two years ago. The change meant that those who did not win a place in the government-funded higher education berths, no longer had to pay tuition fees as long as they pass a certain number of courses each year.
Students are more aware of student loans, and no longer see it as free money without a certain purpose, Triin Messimas, of SEB, said, adding that students now pay more attention to the fact that the sum has to be repaid after graduation.
Another reason is the interest rate, fixed at 5 percent since 1997, which is no longer attractive as many other loans, such as mortgages, already have lower interest rates. Benefits of student loans, including tax exemptions on interest and state subsidies for certain jobs such as police officers, or for giving birth, have disappeared.
Currently, students can take out up to 1,920 euros per year in student loans.