Since the introduction of CSN (Centrala studiestödsnämnden/Swedish Board of StudentFinance), the amount of students entering higher education has drastically increased. Along-term investigation has been conducted by the Swedish Financial Department(Finansdepartementet) in order to identify potential ways of improvement of the Swedishstudy aid system. A financial incentive proposition was made to decrease the graduationage, which CSN has rejected on the basis of limited effect, additionally, CSN stated thatreasons for late graduation are unknown.To investigate potential reasons for late graduation a “Potential system misuse”hypothesis was developed which intended to explain the trade-off students have to facewhen starting university studies - early graduation and no savings or late graduation, butsignificant savings for the future life. Further advantages or disadvantages of early or latestart of university studies have been analysed.This research was aimed to provide objective and empirical support on the claims madeby the CSN in their response to the government’s investigation into the Swedish studyaid system. The purpose of this research was to examine if a financial incentive wouldprovide significant effect on possible earlier average graduation age and to identify towhat extent are economic reasons for late graduation age unknown. Furthermore, twohypotheses concerning CSN loan taking not as intended (potential system misuse) andamount of savings having an impact on such a misuse have been analysed.The research has considered examples from neighbouring Nordic countries as well as theUnited States in order to consider strengths and weaknesses of each system. Suchcomparison has helped to identify what seems to be working in order countries and whatcould perhaps be adapted in the Swedish system too.A quantitative method of research has been adapted since it seemed the most appropriateand effective in order to gather a significant amount of data from a sample (UmeåUniversity students) to draw conclusions about the general population (students takingCSN study aid in Sweden). A non-probability, convenience sampling procedure has beenadapted, with clear arguments presented why it was deemed to be the most appropriatefor the purpose of this research. A sample of 301 responses allowed significant analysisto be conducted.With this research and a hypothetical scenario created the authors were able to concludethat writing off student loans could have a significant effect on the graduation age,especially since it was favourably seen by older students in the research. The reasons forlate start of university studies have been identified, but not limited to, having strongpositive correlation with taking CSN loan not as intended and value of one’s combinedsavings. Empirical support has indicated that while the majority (53.1%) of students wereusing CSN loan as intended, according to our data approximately half of all studentsmisuse the CSN loan. Furthermore, a significant correlation between high value ofsavings and using CSN not as intended has been found.