Student demand for loans doubles as Estonia eases borrowing terms

Demand for student loans has surged this autumn, with applications and requested loan amounts nearly doubling at Swedbank and the volume issued by LHV tripling, ERR reported on Tuesday.

At Swedbank, the number of applications and the total amount requested have both almost doubled compared with the same period last year, said Eneli Nairis, the bank’s head of small financing. LHV said the volume of loans issued had tripled, while applications rose by 90 percent.

The banks attributed the increase largely to more favourable loan terms introduced this autumn. Students no longer need a guarantor or property as collateral, interest rates have fallen and repayment periods have been extended.

The maximum loan amount rose to 6,000 euros last autumn, but borrowers do not always take the full amount. This year, the average loan issued was 5,155 euros at Swedbank and about 5,400 euros at LHV.

Both banks have seen a marked rise in applications from Estonian students studying abroad. At LHV, about one in five student loan applicants is over 35. Swedbank said the age profile has changed little in recent years, with roughly half of applicants aged 25 or younger.

LHV declined 12 percent of student loan applications. Reasons include not meeting the loan requirements or having a problematic credit history. Students on academic leave and those who have already used the maximum loan available at the same education level are among those who cannot qualify. SEB, Coop Pank, Luminor and Bigbank do not offer student loans.