The Government would like to move students within the scope of the general housing allowance
The Government is proposing that both upper secondary and higher education students be transferred under the general housing allowance. On the other hand, students studying abroad and students studying in Finland in adult education centres or the Sámi Education Institute in payable course modules and living in student accommodation arranged by the educational institute would still receive the student’s housing supplement in accordance with the current student financial aid system. The reform is related to Juha Sipilä's Government’s 2017–2020 plan for public finances and is intended to become effective on 1 August 2017.
The same proposal includes the implementation of €9.5 million index-linked savings in the costs of housing allowance as decided in the Government's 2017 budget proposal.
The current student housing allowance is a maximum of €201.60 per month. The smallness of the allowance makes the livelihood of students living alone more difficult. General housing allowance is better than student housing allowance in taking into account the real level of rents and the differences between municipalities in living costs. The reforms would put students, as far as the housing allowance is concerned, on a par with other low-income earners and would simplify the social security system.
The general housing allowance paid to households is targeted differently from the rigid and individually-based student’s housing supplement. The housing allowance would target fewer students than it does currently and those whose housing costs are high in comparison with their income.
Due to the reform, the costs of the general housing allowance would rise by €137 million in 2017 and by €304 million in 2018. The costs of the student housing supplement would decrease by €114.5 million in 2017 and by €250 million in 2018. Thus the total costs of the general housing allowance would increase by €22.5 million in 2017 and by €54 million yearly afterwards. Income support costs to be paid to students are estimated to decrease by €6.8 million in 2017 and by 15 million yearly afterwards.
The intention is to cover the increase in housing allowance costs from the costs of the general housing allowance. In the greater Helsinki area (municipality categories 1 and 2), maximum housing costs would not increase in 2017. Elsewhere in Finland (municipality categories 3 and 4), maximum housing costs would decrease by 5 percent. In relation to the level of rents in the greater Helsinki area, the maximum housing costs in municipality categories 3 and 4 are higher. For this reason, it would be justifiable to direct the decrease in maximum housing costs to municipality categories 3 and 4.
Not increasing the maximum housing costs and decreasing the maximum housing costs for municipality categories 3 and 4 by 5 percent would decrease the general housing allowance costs by €37.8 million in 2017 and by €66.8 million yearly afterwards. The total savings would also cover the index-linked saving of €9.5 million, as agreed in the State budget, of the general housing allowance. Not increasing the maximum housing costs and decreasing the maximum housing costs for municipality categories 3 and 4 by 4 percent would increase the income supplement costs by an estimated €8.4 million in 2017 and by €13.8 million yearly afterwards.
In 2015, the student's housing supplement that was paid totalled €267 million, of which €20 million was paid to students studying abroad. The costs of the general housing allowance in 2015 totalled €918 million.
Additional information
Ministerial Advisor Sanna Pekkarinen, tel. +358 (0)2951 50 63434