BM84: Resolution on the Icelandic Student Loan Fund
Now the law on the Student Education Fund is to be reviewed in Iceland. LÍS and ESU
stress that the opportunity this revision creates will be used to its fullest in order to
make necessary changes to the Fund. In the past 10 years the amount of students
who use the fund has decreased by half which proposes important questions
regarding access to higher education in Iceland. It is necessary to analyze which
group the current incentive and grant system benefits, and then examine whether
the role of the fund as a social equalization fund can be better fulfilled with other
implementations. It is clear that the low amount students receive for maintenance
from the loan limits access to education and is one of the main reasons why
Icelandic students work more with their studies than other European countries
according to statistics from Eurostudent. In addition, the arrangement of the free
income limit creates a vicious circle where students are forced to work more to
support themselves, despite being on subsistence loans, but at the same time the
student loans are reduced so they have to work even more. As before, students
underline the importance that student loans are sufficient to cover general living
expenses in this country.
Interest rates on student loans in Iceland have worsened significantly with the
introduction of the Student Loan Fund Act. The previous Student Loan Fund was
indexed and carried a fixed interest rate of 1% until recently, when they were lowered
to 0.4%. Interest rates on loans from the current Icelandic Student Loan Fund vary,
however, and can be up to 4% for indexed loans and 9% for non-indexed loans. On
March 10, the current student loan’s interest rates were therefore 2.28% (index-linked)
and 9.11% (non-index-linked).
Students are requesting statistics on borrowers who have met the law’s requirements
to complete their studies on time and thereby receive a 30% elimination of their loan,
broken down by family and residential situation, including whether they live abroad,
in the hope that it will shed light on which groups of new the system benefits the
most, as well as which groups need to be better supported.
It can be assumed that after three years there will be better experience with the
system and it is likely that more detailed information about the effects of the system
will be revealed during the period.
It is clear that there is limited data on this new system and analysis of the effects of
the changes it brought about are scarce. It is therefore particularly important that the
Icelandic Ministry of Universities, Industry and Innovation makes a detailed
assessment of the situation and devotes plenty of time to the analytical work on
which this revision must be based. It is also necessary to examine the organization
itself, i.e. The Icelandic Student Loan Fund, and the work processes that are carried
out there. The analysis must take into account factors such as maintenance loans
and high student employment.
It is clear that Icelandic students still, in principle, live with an inadequate support
system. The review must be used to the fullest and the system as a whole should be
examined in detail, with equal access to education as a priority.
The European Students ́ Union and Landssamtök Íslenskra Stúdenta urge the
Icelandic government to make the necessary changes in order for the fund to fulfill its
statutory role as a social equalization fund.
Proposer: LÍS, Iceland