+ WHO CAN CONTINUE TO BORROW FROM LÍN?

Students who took student loans during the school year 2018-2019 or later can apply to continue receiving loans according to older laws.

This is valid for 7 years from when the new laws take effect (July 2020), as long as there is continuity in the studies. Students may, however, take a year long leave without having an effect on this clause

It also does not matter whether the student changes study programs or not. When applying for a student loan for the next academic year, students who meet these criteria will be given the opportunity to choose which loan system they want.

+ DO YOU HAVE AN OPEN BOND ACCORDING TO OLDER LAWS (FROM LÍN)? THEN YOU HAVE THREE OPTIONS:

1. To continue to borrow under the old law. Then the same terms apply as before, no reduction, no child allowance, but on the other hand low, fixed interest rates.
2. To close the bond from LÍN and establish a new one from Menntasjóður. You can not get a reduction of the loan you received from LÍN, but you are entitled to a reduction for the part of your studies for which you receive a loan from Menntasjóður. If a student decides to take out a loan under a new law, this will not lead to the termination of the older loan. Graduation will continue to be defined in the same way, ie. when a student ceases to receive studies from the fund.
3. To combine the bond from LÍN with a new bond from Menntasjóður. The same applies here with regards to the reduction, you will not receive reduction retroactively for the part of the studies that took place before the introduction of the Menntasjóður. What needs to be kept in mind is that by merging the bonds, the fixed interest rate on the loan from LÍN will change to the variable interest rates of Menntasjóður. It can be expected that interest rates at the LÍN will almost always be lower than those of Menntasjóður. Installments will also start one year after graduation and not two.

+ HOW DO INSTALLMENTS WORK IF YOU HAVE TWO BONDS FROM DIFFERENT SYSTEMS, LÍN AND MENNTASJÓÐUR?

If a student has both a loan under the old and the new laws, they can request to repay the new loans first if the repayments of both loans are income-related (i.e. the repayments of the new loan are in accordance with Article 21 of the law). If the repayments of the new loan are in the form of equal payments (according to Article 20 of the Act), both loans must be paid at the same time.

+ HOW DOES A PRINCIPAL WRITE-OFF WORK IF ONLY PART OF THE STUDENT LOANS WERE TAKEN OUT WITH NEW LOANS?

If the person in question completes their studies within the scope given to complete their studies, they will receive a reduction of the part that was taken according to the new law.

For example, an individual who took out a loan under the previous law for the first two years of undergraduate studies, but under the new law on the third, would only be entitled to a loan reduction from the third year.

+ WHO IS ENTITLED TO GRANTS FOR THE MAINTENANCE OF CHILDREN?

A student has the right for a grant for the maintenance of a child below the age of 18, amounting to single child support per month if they meet the following conditions:

• They have met the minimum requirements for academic progress or is exempt from them
• The child's legal residence is with the borrower or the borrower is paying child support for the child.

The amount of the grant for each dependent child is ISK 5,340 for each completed ECTS unit, the same amount applies to the grant for child support.

+ + WHAT CONDITIONS MUST BE MET TO GET A 30% LOAN REDUCTION?

If a student completes their degree at the time stipulated in the study plan, they are entitled to a grant which includes a 30% write-down of the principal of the student loan debt and indexation from the day the bond is closed. If the program is organized as a three-year program, the student is entitled to the grant if they complete the program in three years. However, this only applies to studies that are organized as full-time study for two semesters with a minimum of 60 ECTS. In order to receive the grant, it is necessary to submit confirmation of when the study began and when it ended.

+ WHAT IF I DO NOT MANAGE TO FINISH ON TIME?

Students have some leeway in delaying their studies without reducing their eligibility for a study grant and this can be:

• One year beyond period specified in the organisation of an apprenticeship, internship or preparatory studies.
• One year beyond the period specified in the organisation of a bachelor degree and masters degree.
• Six months beyond the period specified in the organisation of a diploma degree.
• Two years beyond the period specified in the organisation of a doctorate degree.

Before a student can be awarded the grant, confirmed information must be available on when the study began and when it ended with a copy of the confirmation of the final examination. The student is responsible for the fund receiving such information. As a general rule, confirmation must be received within 6 months of graduation.

Exemptions from academic progress are not considered delays in studies, i.e., you always receive an additional year even if you have been granted an exemption due to illness, childbirth or other circumstances, which are described in more detail in the next section.

+ EXEMPTIONS FROM REQUIREMENTS ON ACADEMIC PROGRESS

A student is entitled to an exemption in the following circumstances:

Illness

• If a student becomes significantly ill during the study period, up to 6 credits in term schools and 4 credits in quarter schools may be added at the end of credits, so that the credits will be a total of 22 in term schools and 15 in quarter schools after additional credits have been added.
• If a student falls ill in the second semester or during exams, up to 22 ECTS credits may be added in semester schools and 15 ECTS credits in quarter schools.
• If an exemption from academic progress is approved, credit units are raised to the minimum academic progress, but never above that.

Childbirth

• A parent is entitled to increased leeway for up to 3 months before giving birth due to illness during pregnancy if they have completed satisfactory academic results in one semester in the last twelve months and expects to be able to maintain satisfactory academic results for the semester after she needs the exemption.
• It is then permitted to add up to 16 ECTS credits in semester schools and 10 credits in quarter schools at the end of credits and the credit right is thus increased to 22 ECTS credits during the semester.
• A student can use this leeway until the child's 12 months of age, but the loan right with the fund does not increase.

Disability

• If a student is unable to return the minimum result due to 75% disability or more, up to 13 ECTS credits in semester schools and 8 credits in quarter schools may be added at the end of credits and the credit right thus increased to the minimum result per semester.

Dyslexia and other specific learning difficulties

• If a student is unable to complete the minimum academic progress due to dyslexia or other specific learning difficulties, an exemption from the minimum achievement may be granted. It is then permitted to add up to 13 ECTS credits in semester schools and 8 ECTS credits in quarter schools to academic achievement per semester and thus increase the credit entitlement per semester to a minimum achievement. A diagnosis / certificate of dyslexia or specific learning difficulties must be available before an exemption is granted.

Credits in special circumstances and graduation

• A student who only has the option of taking 10 ECTS credits or 20 ECTS credits in a given semester can receive a loan in accordance with completed credits if they complete at least 20 ECTS credits. Students must, however, be registered for 30 ECTS credits until the end of the second semester.
• A student who does not have the opportunity to complete the minimum result due to the organization of studies or assessment of previous studies may be entitled to a loan in proportion to the number of credits completed.

+ HOW DO MONTHLY LOAN DISBURSEMENTS WORK?

It is possible to choose for loans from Menntasjóður to be paid out monthly, although not immediately at the beginning of the semester, but on 1 October, 1 February and 1 June. In the new system, it is therefore possible to skip taking out a bank loan at the beginning of the study period in order to cover expenses until the student loan is paid out at the end of the semester.

According to the allocation rules 2020-2021, monthly payments will begin

• October 1st in the fall semester (then again November 1st, December 1st)
• February 1st in the spring semester (and then March 1st, April 1st)
• June 1 during the summer semester

It is also possible to adhere to the LÍN arrangement, i.e. that student loans are disbursed at the end of the term after confirmation of academic progress has been received by the loan fund.

+ DO I NOT HAVE TO SUBMIT ACADEMIC RESULTS TO RECEIVE MONTHLY LOAN REPAYMENTS?

No, monthly payments are received by students before they submit academic results. However, there is a requirement to demonstrate academic achievement at the end of the semester. It is therefore important to look at and understand what happens when you get an overpaid loan.

Further study assistance is suspended until the treatment of an overpaid loan is completed.

If a student has received monthly payments but does not meet the fund's conditions for academic achievement, and does not meet the conditions for exemptions, they must repay the loan. A special repayment bond is then agreed upon. If the student intends to continue taking out a student loan, the overpayment can be offset, that is, the amount they owe is deducted from the next loan.

+ WHAT ARE VARIABLE INTEREST RATES?

Menntasjóður offers variable market interest rates. LÍN’s interest rate is fixed, since 1992 the interest rate on student loans from LÍN had been fixed at 1%, but in the spring of 2020 it was announced that the interest rate would be reduced to 0.4%.

The interest rate on loans from Menntasjóður is based on the lowest possible interest terms offered to the National Treasury at any given time, plus a 0.8% premium that is due to the fund's defaults. The laws on Menntasjóður state that the indexed interest rate never exceeds 4% and the non-indexed interest rate never exceeds 9%.

If a student is already borrowing from the Loan Fund, they may continue to borrow according to its terms for the next 7 years.

It is not possible to convert a bond from the LÍN into one from Menntasjóður and receive a 30% reduction of that loan. It is only possible to start a new bond within Menntasjóður to receive a 30% reduction.

+ SHOULD I TAKE OUT AN INDEXED OR NON-INDEXED LOAN?

• Indexed loans - higher risk, rates could be lower or higher than non-indexed loans
• Non-indexed loans - more stable interest rates, but may be higher due to the premium that the bank puts on top

Indexed loans are linked to inflation. On the Central Bank's website, inflation is defined as follows:

"Inflation is defined as a sustained rise in general prices and is most often measured as a twelve-month change in the consumer price index, which measures the average price of goods and services on the market. Inflation means that the value of money decreases, i.e. less quantity of goods and services is obtained for each ISK. Statistics Iceland measures the consumer price index and bases it on regular surveys of household expenditure in the country.”

If last year's inflation was 3%, that means that a product that cost 100 ISK last year, costs 103 ISK today.

An indexed loan takes into account inflation. This means that if inflation is 3%, the principal of your loan will increase by 3% per year. On the other hand, the price level of everything else rises by 3% as well, so the real value of the loan remains virtually unchanged. With an indexed loan, you as a borrower are taking all the risk when it comes to the inflation outlook in the country. If inflation all of a sudden becomes 10%, for example, then your loan increases by 10%.

Non-indexed loans do not change with inflation. With a non-indexed loan, it is not the borrower but the bank that takes the risk of inflation. The bank still charges for this risk, with an extra percentage based on the inflation forecast. Interest rates on non-indexed loans are generally higher than on indexed loans, but they are more stable.

+ INCOME CONNECTION? WHAT IS IT AND SHOULD I CHOOSE THAT OPTION?

Both Menntasjóðurinn and LÍN offer an income connection, ie. installments depend on the borrower's income. The income connection in Menntasjóður is only offered to those who complete their studies before or in the year in which the age of 40.

The monthly income-related installment is 0.3125% of the borrower's income base, which is the total amount of wages and income you have received in the last two years. In order to be able to calculate an income-related installment each year,Menntasjóður needs to obtain information on the borrower's income from the Director of Internal Revenue.

The income connection is designed so that the repayment of the loan will never be too much of a burden. It can take longer to repay a loan with an income link, which means the loan has a longer time to accrue interest, so the total amount you have to pay will eventually be higher. Instead of an income connection, you can also choose to repay the loan with monthly fixed installments, which are explained in more detail in the next section.

+ MONTHLY FIXED INSTALLMENTS? WHAT ARE THEY AND SHOULD I CHOOSE THAT OPTION?

Within Menntasjóður, borrowers can choose whether to repay their loan as an equal-payment loan (ie fixed monthly installments) instead of paying off their loan income-related. It can be assumed that borrowers who repay their loans as equal-payment loans repay their loans earlier and therefore the total cost is lower. However, it may be wiser to choose an income link and have installments related to the borrower's income. It is always possible to pay into the principal of the loan if the borrower can afford to pay more of the loan than was expected with the income connection, and in this way repay the loan in a shorter period of time.

+ WHEN DO I START PAYING OFF THE LOAN AND HOW DO THE INSTALLMENTS WORK?

Loan repayment begins two years after graduation with loans from LÍN and one year after graduation with loans from Menntasjóður. In fact, it can be seen as advantageous to start repaying a student loan sooner than later, if the borrower can afford it, as the loan will then have less time to accumulate interest.

Installments are divided into fixed installments and income-related installments.

Menntasjóður now offers a choice of monthly fixed installments, instead of paying twice a year as with LÍN.

+ I'M NOT READY TO START REPAYING MY LOAN. CAN I POSTPONE IT?

You can apply for a deferral of bond closing if:

• If the student is still in full creditworthy studies, but no longer applies for a student loan, the person in question can apply for a postponement of the closing of the bond.
• It is possible to take up to a one-year study break and still postpone the closing of a bond, if the student meets the requirements for academic achievement after the first semester that they start studying again.
• The closing of a bond may be postponed for a maximum of four years from the time the fund's first loan was granted. To do this, the student must submit documents that show that they are still studying and with creditworthy results.
• A student in fully credit-eligible studies who has started to pay off older loans may, under certain circumstances, apply for a grace period of up to one year at a time in accordance with Article 15.1 of the Allocation Rules.

It is not possible to apply for a deferral of bond closing if:

• A student takes a break from studies for more than one school year. If the person in question resumes studies, a new bond must be signed.
• You must apply for a deferral of bond closing at the latest in the first semester after a one-year study break.

+ CAN I DEFER INSTALLMENTS?

You can apply for a deferral in the case of:

• Unemployment where the student is registered on the unemployment register and / or in active job search.
• Incapacity for work due to illness and / or disability, which falls under the definition of the right to an invalidity pension from Tryggingastofnun.
• Pregnancy or childcare, spouse care or other similar reasons cause significant financial difficulties for the borrower.
• Care of children or spouses that affects the applicant's potential for income generation.

It is necessary to apply for a special exemption no less than 60 days before each due date.

It is assumed that financial difficulties have lasted for at least four months before the due date of the installment for which an exemption is applied for.

For the school year 2020 - 2020 no deferrasl of installments are granted if the borrower's annual income in 2019 exceeds ISK. 4,470,000 and the annual income of a married / cohabiting couple is over ISK. 8,940,000.

If the borrower has dependent children under the age of 18 when applying for the exemption, 430,000 ISK will be added to the borrower's reference income when assessing the exemption.