Student interest in taking out student loans rose sharply this fall at two banks offering such loans, LHV and Swedbank.
"Interest in student loans has increased significantly this year. Compared with the same period last year, both the number of student loan applications and the total amount requested have essentially doubled," Eneli Nairis, head of small financing at Swedbank, told ERR on Tuesday.
"Compared with the same period last year, the total volume of student loans issued has tripled, while the number of applications has increased by 90 percent," said Catlin Vatsel, LHV's head of retail financing.
According to Nairis, the increase in interest is likely due to more favorable student loan terms introduced this fall. Students no longer need a guarantor or real estate collateral to take out a loan, interest rates have fallen and the repayment period has been extended.
"These changes make taking out student loans easier and more flexible for students than before," she said.
"We can clearly see that the changes to student loan terms have had an impact. We have not seen such a large jump in demand for student loans in previous years," Vatsel of LHV said.
Although the maximum student loan amount was raised to €6,000 last fall, not all applicants borrow the full amount. This year, the average student loan issued was €5,155 at Swedbank and approximately €5,400 at LHV.
More students studying abroad among applicants
Representatives of both banks said the number of Estonian students studying abroad among this fall's applicants has increased noticeably.
Vatsel also pointed out that approximately one-fifth of student loan applicants are over the age of 35.
"Studying has long since ceased to be something reserved for people in their 20s. The fact that one-fifth of our student loan borrowers are over 35 is a good indication of just how common it has become to pursue education later in life," LHV's head of retail financing said.
According to the Swedbank representative, the age distribution of student loan applicants has not changed significantly over the past few years. Approximately half of applicants are 25 or younger, while the other half are older.
According to figures provided by Vatsel, 12 percent of student loan applicants at LHV were rejected. The main reasons for rejection are failure to meet student loan eligibility requirements or issues with the applicant's credit history.
For example, student loans cannot be issued to students on academic leave or those who have already borrowed the maximum amount available at the same level of education. Not all levels of study qualify for student loans, while previous payment defaults or outstanding debts can also prevent applicants from obtaining a loan.
SEB, Coop Pank, Luminor and Bigbank do not offer student loans.
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