The Finnish government has recently introduced comprehensive austerity measures to reduce the government debt. One of the austerity measures targets student allowances and student loans. In Finland, students are entitled to student benefits that consist of a monthly allowance from the government which is on average 400 euros per month as well as a guaranteed loan of 650 euros per month for the duration of their studies. (Mikkonen, 2023) The new policy proposes freezing the index rates of the allowance, which can mean a monthly decrease of more than hundred euros per month for the students who receive these benefits and constitute an approximate loss of 17% of the overall benefit. Moreover, the government plans to increase the share of the loan in the benefits to make up for the lost part of the student allowance. This would mean that the student loan would increase from 650 euros per month to 850 euros and for example if a student completed their studies in five years and withdrew the loan every month, the overall amount of the loan would increase by 10 000 euros. (Syl, 2023) In this post, I will analyze the new policy regarding student benefits through a WPR approach (Bacchi & Goodwin, 2016) by identifying problem representation, assumptions and silences as well as illustrate how the logic behind this policy can be deconstructed and how the new policy supports normalization of indebtedness especially among students and. Furthermore, I want to acknowledge the privileged position of Finnish students who are receiving the benefits in the context of the whole world, however, I do not believe it justifies the reduction of the benefits, taking steps backwards and the lives that are affected due to the cuts of the benefits.
In simple terms, the problem representation of this particular policy is that student benefits and students cost too much for the government and a too big share of the government budget is used for student benefits and students. Thus, it is represented that there needs to be cuts in the student benefits as it is too expensive and money consuming for the government to sustain the current amount of the money used for these benefits. More broadly, it is proposed that since the debt of the Finnish government has been increasing within the past years (Parviala, 2017), cuts in multiple sectors, including education and students, need to be made in order to decrease the amount of debt and maintain a functioning economy.
The policy of cutting student allowance and increasing the share of the loan has multiple underlying assumptions and knowledge that it builds on to. Firstly, it is assumed that cutting the allowance and increasing the share of the loan will ease the budget of the government and thus contribute to decreasing the loan of the government. Moreover, the policy relies on the logic of ‘austerity or consolidation state’. The logic of ‘austerity state’ is to balance public debt by cuts on expenditure rather than for example by increasing taxes or maintaining the debt (Cooper & Whyte, 2017) which can be seen in the policy of cutting benefits from the Finnish students. The cuts in turn push people to consume more from the private sector which will speed up economic growth and help in balancing the public debt (Cooper & Whyte, 2017). For example, as Finnish students will withdraw larger debts from banks and therefore pay higher interest rates, the banks will eventually profit more and contribute to economic growth as the logic of ‘austerity state’ suggests. In addition, as suggested by many politicians in Finland (Kokko, 2017) the cuts urge students to work more alongside their studies which brings more labor force to the private sector and can further the economic growth. This also follows the logic of neoliberalism in which the economy is the basis for decisions and market functions as the organizing force (Schram, 2018). Furthermore, as the policy aims to decrease the debt of the government by cutting benefits and increasing the loans of the students, therefore replacing debt from public to private (Montgomerie, 2020), the assumption is that household debt is more desirable than government debt, in other words, government debt is a problem and something that needs to be balanced but household debt is more acceptable, as well as that it is normal for specifically students, in comparison to other groups of society, to live with loan money as loan is offered for them to cover living expenses.
Certain silences and matters that are left unproblematic can be identified in regards to the policy. Since the policy assumes that government debt will be balanced by austerity measures, other ways of balancing the debt are left silent such as increasing income or corporation taxes. An option to not try to balance the government debt is left silent as well since the assumption is that a government debt is a problem. Moreover, the increased indebtedness of students as well as the consequences that it might bring such as poverty are left unproblematic as the new policy suggests taking out a loan to cover living expenses. Since the share of the loan will increase and the allowance decrease, which might lead to students working more next to their studies in order to avoid being in debt, the time spent in school might increase which in turn delays graduation and entering the job market. Hence, cutting the allowance and increasing share of the debt will not automatically lead to economic growth and balancing the government debt as explained in the previous chapter. In addition, increased amount of work next to studies might lead to increased rates of burnout as well as mental health and health issues (Afonso & Fonseca, 2017) which again hinders graduation and decreases labor force as well as increases the use and expenditure of public healthcare and sick-leave allowances. I interviewed a 24-years-old student from the University of Helsinki who stated: “I am genuinely worried about how I am going to manage when my student allowance will decrease. I already have a big loan to pay back once I graduate, so I do not want to increase that. I am already extremely cautious about where I spend my money so I do not think I can change anything in that either. I think my only option is to work more and I am not sure how to find the time for it since I am already lacking some time as I am a full-time student and I work twice a week.” Moreover, she argued: “I think it is very unfair that there are cuts targeting students who are already struggling, and at the same time tax rates of people who are earning a lot are being decreased.” As she mentions, the government recently decreased the rates of income taxes, which will be most beneficial for high-income earners (Muhonen, 2023), as a way to enhance the economy as people have more money to spend on private goods. Hence, the policy leaves the role of other groups of society, in this case the high-income earners, unproblematic in regards to balancing the budget through austerity measures as the cuts are targeted towards student benefits and the income tax will be decreased. Moreover, the inequality this will cause is left unproblematic as well as the amount of people that will live under the threshold of poverty will increase due to the cuts on student benefits (Salonen, 2023) as well as equal access to education will decrease as the allowances are cut which especially affects lower income people.
To conclude, the policy on cutting student allowance and increasing the share of the loan follows the logic of ‘austerity state’ as well as neoliberalism and normalizes taking a loan to cover living expenses as a student since it offers the loan as an alternative to student allowance. The policy does not address other ways of balancing government debt nor not trying to balance the debt at all. Moreover, it leaves increasing indebtedness of students as well as possible consequences of it such as poverty and inequality silent.
Bibliography
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Bacchi, C. & Goodwin, S. (2016) Introduction and Making politics visible: The WPR Approach. In: Poststructural Policy Analysis: A Guide to Practice. Palgrave McMillan, pp. 3-26.
Cooper, V., & Whyte, D. (2017). The violence of austerity. Pluto Press.
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