The comparison of student loan demand and supply between India and Finland : combining cultural, institutional and individual perspectives

Abstract

This study explores the contrasting student loan systems in India and Finland with a focus on how they influence access to higher education, loan sufficiency, and long-term financial sustainability for students. It combines cultural, insititutional and individual perspectives in two different countries – India and Finland. As education costs rise globally, more learners rely on loans to fund their academic journeys. However, the structure, accessibility, and consequences of these loans vary significantly between countries. India’s education financing remains heavily reliant on commercial banks and newer financial technology platforms, but strict eligibility criteria, such as the requirement for collateral, often exclude low-income and rural applicants. On the other hand, Finland’s welfare-based approach provides state-guaranteed student loans with minimal administrative burden. Despite this inclusive structure, concerns have grown over increasing loan amounts and repayment stress, especially among recent graduates and international students. This comparative research is timely, as both countries are undergoing educational reforms and shifts in policy that directly impact how students experience debt and make decisions about their futures. To investigate these issues, a qualitative research design was employed, incorporating semi-structured interviews and document analysis. Participants included final-year university students, financial aid officers, and policy advisors from both India and Finland. The interviews captured lived experiences and institutional insights, while supporting policy documents and economic reports helped contextualise the findings within each national system. The data were analysed using a thematic approach, which allowed recurring patterns and differences to emerge naturally from the narratives. Key themes included the ease of accessing loans, perceptions of debt, sufficiency of financial support, and the long-term impact of borrowing on career choices and financial well-being. The study used Human Capital Theory to understand student borrowing as an investment in future income, and Public Choice Theory to examine how political and institutional differences and decisions shape loan policies. The findings reveal that while Finland offers more equitable access to student finance through its centralised model, the increasing cost of living and rising interest rates have made many students cautious about taking on large debts. In India, systemic barriers such as collateral requirements and uneven lending practices disproportionately affect students from disadvantaged backgrounds. Additionally, societal attitudes toward borrowing in India remain deeply rooted in moral and familial concerns, which often discourage students from pursuing loans, even when necessary. In contrast, Finnish students generally view borrowing as a routine and manageable part of their education journey. Despite these differences, both countries are facing challenges in aligning student loan policies with evolving educational and economic realities. The research concludes that reforms are urgently needed in both contexts. India would benefit from expanding income-based repayment systems, improving regulatory oversight of private lenders, and enhancing financial literacy. Finland, meanwhile, should consider introducing caps on loan interest rates, expanding non-repayable grants, and monitoring the long-term effects of debt on graduate life. By centring student voices and comparing cross-national systems, this study contributes to a more inclusive understanding of how education funding policies can either support or hinder equitable access to higher learning.