08 - Iceland - Financial support for students
The government has operated the Student Loan Fund for several decades, with the aim of providing
equal access for students with different socio-economic backgrounds and, based on the same
principle, provides free tuition at public institutions.
The Fund offers student loans that are sufficient to cover costs incurred by the studies (tuition fees,
books and materials, travelling expenses, etc.) as well as the cost of living.
The Fund provides assistance for the period of study or generally for two semesters of equal length for
full-time studies (60 ECTS). For the academic year 2006-2007 basic living costs are estimated at
€1,927 per month. The amount takes into consideration the size of the student’s family. For example,
for a student cohabiting with a partner and with one child costs are calculated as 125% of the basic
living costs, or €1,158 per month. All income forming the student's tax base will be subtracted by 10%
of the amount of assistance during the study periond. The rates of support for students living with lowincome
parents may be raised to 100% if the income of both parents is under the prescribed threshold.
In order to receive loans, students are obliged to complete at least 75% of full-time studies according
to the programme of the educational institution, approved by the board of the Fund. Assessment of
academic progress takes place each semester and if a student does not meet the required standards
the loans will be reduced proportionally. For example, the loan to a student who completes 83% of fulltime
studies will be reduced by 17%.
Repayment of loans begins two years after the completion of studies. The interest rate on loans made
by the Fund is 1% but can vary, although it is at no time higher than 3% per annum on the principal of
the debt. Student loans are index-linked, based on changes in the consumer price index of the Central
Bank of Iceland. The annual repayment of loans comprises two elements: one fixed annual sum, €831
(ISK 83.872) in 2006, and one supplementary payment of 3.75% of the person’s income, calculated on
the previous year’s tax base for municipal income tax purposes.
In accordance with the EEA Agreement, individuals from the European Union member states and the
EEA-EFTA countries (Norway and Liechtenstein) who are residents in Iceland in connection with their
work, their families, and others who are or have been supported by them, are entitled to student loans
from the Fund. One condition for receiving loans from the Fund is that the applicant has been
domiciled in Iceland for two continuous years, or has been domiciled in Iceland for three of the ten
years preceding the beginning of the period for which the student loan is applied.
Students from the Nordic countries, who are permanent residents in Iceland and are registered at an
Icelandic institution of higher education, are also eligible for student loans if they are not supported
financially by their own country.
The Icelandic Student Loan Fund may grant loans to other foreign students if reciprocal agreements
have been concluded between their countries of origin and Iceland.
The Ministry of Education, Science and Culture annually offers a limited number of scholarships to
foreign students to pursue studies in Icelandic language and literature at the University of Iceland.
Grants are available for postgraduate, research-oriented studies at higher education institutions in
Iceland. The grants are awarded on the basis of a research proposal submitted jointly by a student and
a faculty member.
Institutions:
The Ministry of Education, Science and Culture
The Icelandic Government Student Loan Fund
University of Iceland
Eurydice - the information network on education in Europe
Date: 2009
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