Since February 2018, the Ministry of Education has worked on the revision of the Icelandic Student Loan Fund (LÍN) following years of demands for improved government support for students by the National Union of Icelandic Students (LÍS) and their member unions who represent each university in Iceland and Icelandic students abroad. Previous attempts had been made to reform the student loan system in the last decade which did not make it through parliament, so it is therefore with great pleasure that LÍS announces the Act on the Icelandic Student Loan Fund, which was approved by the parliament on June 8th and came into force July 1st of 2020. The act introduces Menntasjóður, a new and improved Icelandic student loan fund. Representatives from LÍS took an active part in developing the bill that has now passed into law, working with experts and government officials towards increasing support for university students and thus making higher education more accessible for a wider group of individuals.
The new fund meets many of the demands set by LÍS and contains a variety of improvements from its predecessor, LÍN. These improvements are believed to greatly benefit both current and future students. A significant improvement of the fund is the implementation of a grant system. The system enables students to apply for grants for child support and a study grant for students who conclude their studies within specified timeframes, with some flexibility. The study grant shall amount to a 30% reduction in the principal of the student loan along with indexation, at the end of studies.
Contrary to LÍN, Menntasjóður allows students to receive monthly payments. This will impact students‘ ability to thrive throughout their studies. Menntasjóður additionally has a new interest rate cap structure, thereby meeting LÍS‘ demand for lowering the interest rate cap. Students will begin repaying their student loans one year after finishing their studies.
LÍS has three representatives on the board of Menntasjóður and continues to work alongside the government to improve and optimize the Icelandic student loan fund.
To read more about the Icelandic student loan fund, click here.