2022 marks a temporary increase in the income limit for student financial aid

2 November, 2021

The Government hands over a proposition of a temporary increase of the income limit for student financial aid, that according to initial plans would be applied for the year 2022. Next week (week 45) brings the referral debate to an end and the issue will be decided by the plenary meeting with the budget proposition. The income limit for student financial aid will be increased after the turn of the year by 25 percent according to a supporting document draft prepared by the Ministry of Education and Culture to the Government’s proposition. The income limit that warrants 9 months of student financial aid has been 12 498 euros 2021 and is expected to be increased to 15 630 euros after the turn of the year. The increase marks an approximate sum of 3 000 euros with the expectations of fostering better conditions for students to work alongside their studies.

The income limit has been under a spotlight during the past year after many branches of work have experienced an increasingly large need for workers, but the debate has been ongoing for many years. Besides annual index adjustments of the income limit, there have been no larger increases in the pipeline for years, until now. In 2019 the Labor Institute for Economic Research published a report proposing an increase of the then approximately 12 000 euro income limit to 18 000 euros would not result in any extra expenses for the Government. On the contrary the proposed 50 percent increase would result in an increase of 5,9 million euros in revenue for the Government as a result of an increase in taxes and economic transfers. The report did not take a stand on other issues than the economic implications in their evaluation, but it did offer wind in the sails of the debate. Parallels have been drawn between Denmark and Norway, where the income limits are higher and instead of paying back student financial aid, a higher tax bracket is applied to income that surpasses the limit.

If the Government’s proposition passes in the plenary meeting all students studying full-time and lifting student financial aid will have the opportunity to a higher degree to work and earn more money alongside their studies. One of the arguments against the increase has been the suspicion that more work results in extended studies, however there is no current research that points to that. An increase of the income limit does grant students, who choose to work, the conditions to be more flexible and less stressful in combining studies with work, but it has no effect on students whose work situation remains unchanged. SAMOK points out in their statement that the biggest problem of the proposal is the temporary nature of the increase of the income limits.