Under the student loan scheme, regardless of the bank being used, students can borrow up to €2,000 per person for the academic year, which is reportedly an increase of €80 on the last year.

Student loans carry a fixed rate of interest of 5 percent per annum, and any Estonian citizen studying in Estonia as well as abroad is eligible. The extent to which student loans would be issued to foreign students was not reported. Securing a loan also requires either two private individuals as guarantors, or a with mortgage on real estate located in Estonia as collateral.

LHV Pank had already signed an agreement with the Ministry of Finance on 1 August for the provision of student loans; Swedbank, SEB Pank and Luminor are the other banks which already provide student loans, with Coop Pank discontinuing study loans from the beginning of this academic year.

Estonian Banks issue the loans from their own credit resources. As of March 31, the outstanding balance of study loans was €90.2 million.

Currently shrinking market

Despite the new arrival on the market, the proportion of students taking loans who are eligible to do so has substantially shrunk in recent years. Whereas ten years ago, academic year 2008/2009, 38% of students eligible for a study loan took one out, in 2016/2017, only 6% did so, a total of 3,000 people.

This can be explained largely by the fact that 10 years ago, students who went on to get a job in the public sector, or those with a child under five years of age, could have their loan redeemed by the state, whereas nowadays this is not the case.

Moreover, 2008/2009 was the worst year of the recession of the late 2000s/early 2010s. The government communication office implicitly noted this in a statement in late June where it said that the general populace both had a better socio-economic situation than 10 years ago, and were more aware of the risks and possible outcomes in relation to financial obligation.