“I would like to see the interest on student loans at a reasonable level. The interest rate on student loans guaranteed by the state in the current market in my opinion should be lower than 5 percent, as the loan is backed with a state guarantee,” Sester said.

According to the minister the current law does not allow for this, specifying that the student needs to pay exactly 5 percent interest. “Because of this the law needs to be revised and changed accordingly. And we are planning to do this in cooperation with the Ministry of Education and Research,” he added.

Currently the state guarantees loans to students, in terms of the credit sum as well as the interest due. The recipient of the loan has to pay exactly 5 percent.

The government will likely discuss changing the student loans system this summer, once analyses by ministries as well as proposals have been submitted.

In 2015, Estonian banks made some €7 million in risk-free profits from those state-guaranteed loans. Both interest in student loans as well as banks’ income from them has recently gone down.