The government’s austerity measures hit students – we investigate what’s being cut and where students plan to save

Housing allowance to be cut

The cuts to the general housing allowance took effect on 1 April 2024, but in practice the allowance will only decrease at its annual review. For example, many students who started or moved in autumn 2023 and applied for support have had their housing benefit cut at the beginning of the semester. For a person living alone in Tampere, the maximum housing allowance used to be €357.60, and after the cuts it will be reduced to €312.90.

Personal income will decrease the housing allowance more than before

The cuts will affect the students’ abilities to compensate the reduction in allowance by working. Previously, the minimum payable proportion was lower, and it was also possible for a housing allowance recipient to earn up to €300 per month before their income started to affect the allowance. After the cuts, all income will be taken into account. A student living alone and receiving the maximum amount of housing allowance will, according to the formula for calculating the minimum payable amount, be allowed to earn up to 761 euros per month, but any income after that is going to decrease the amount of housing allowance. In addition to income from work, other income such as the study grant will also affect the housing allowance.
The mid-year change can be a headache for working students: before the annual review, a deduction of €300 from earned income will still be used when calculating the amount of housing allowance, but after the review, income will be calculated according to the new formula.

Housing support to be linked to the study grant

The government is also planning other changes to student housing support.
From 1 August 2025, students are to be transferred back to the housing supplement of the student grant that was in place before 2017. This means that the support would be restricted to only those students that have financial aid months left. Many students would be left without housing support during the summer months, because the amount of financial support months is calculated as nine months for each year of studies, when using the target time for the degree in question, plus only three extra months. However, the change could benefit those living with a spouse or roommates, as the housing supplement for students is planned to be based on personal income only. In this case, unlike with the housing allowance, the amount would not be affected by the income of the whole household. The exact amount and other details of the student housing supplement remain unclear.

It may become more difficult for a person receiving housing allowance
to make savings

The government has proposed to introduce an asset ceiling for the general
housing allowance from 1 January 2025. The change may temporarily also
affect students in 2025 before the transition to the student housing supplement
at the beginning of August. The asset limit would be €10,000 for a single
household and €20,000 for a household with several adults. In addition, €2,000
of deposits would be counted as a working capital that does not affect the
allowance. Those with less than €50,000 in savings would still qualify for the
housing allowance, but savings above the asset limit would reduce the amount
of benefit. For example, a person living alone could have a maximum of €12,000
in savings without it reducing the amount of housing allowance. Non-earning
assets, such as a private car, would not be counted as savings. The details of the
change have not been confirmed.

No change in the study grant, but you can get more student loans

The student grant is to remain frozen at the 2023 level until 2027, which means
that the amount of the grant will not increase with the generic price level. For a
higher education student living alone, the grant will therefore remain at €279,38. However, the amount of the state guarantee for student loans has been increased as of August 2024, and it is now possible to receive a loan of €850 per month instead of the previous €650. The income limits for student loan interest assistance have also been raised at the beginning of this year. In addition, the annual income limits for student grants and the housing supplement will be increased in line with the change in the average earnings of wage earners from the beginning of 2025. The amount of the increase is not yet known.

Retraining will become more difficult

Incentives for adult education or retraining will be smaller in the future, as the adult education allowance, which financed the training of many students who have been in employment for a longer period, was abolished from 1 August 2024. However, it is still possible to receive the allowance until the end of 2025, if the studies have begun before autumn 2024. In addition, the government is planning for a so called one place rule, which would mean that it would no longer be possible to study for two degrees at the same time.

Student survey

Iida Rissanen-Vatja
Logopedics
Third-year student

How do the cuts affect your everyday life?

I’ve studied for some time using the adult education allowance, which I was granted just before it was abolished. I still have the right to it for the autumn period of 2025. Therefore, the cuts might not affect me that much, but I am nevertheless in the target group of adult students who will not be able to receive the adult education allowance in the future.

How do you make savings or supplement the decreased allowance?

I’m good at not buying anything unnecessary. We eat a lot of vegetarian food. I have small kids at home, and I raise them with inexpensive but healthy vegetarian food.

Erkki Tauria
English language
Second-year student

How do the cuts affect your everyday life?

Especially as the allowance is reduced, I immediately have less money to use after rent.

How do you make savings or supplement the decreased allowance?

I work more, and it brings me some extra income.

Nea Koskela
Medicine
Fourth-year student

How do the cuts affect your everyday life?

Not that much. I work besides my studies, the same as before. It gives me
some breathing room in everyday life.

How do you make savings or supplement the decreased allowance?

Probably by working. Probably I’ll also look into my costs a bit, but my finances are in a good balance at the moment.

Eetu Soronen
Computing science
First-year master’s student

How do the cuts affect your everyday life?

In practice, not at all.

How do you make savings or supplement the decreased allowance?

Housing allowance will merge with the study grant next year. That will have the biggest effect. In practice, I will need to take on more student loan debt.