This morning the government presented its proposal for the state budget for 2023. In an uncertain global situation, with rising inflation and an expected recession, a tight budget is being presented. In the face of a recession, it is common to see that education is expanded for few more people in employment. But in the government's budget proposal, there are no proposals that contribute to more people applying for higher studies - on the contrary, several proposals are directly harmful to Sweden's future as a nation of knowledge.
SFS has previously commented on how the new government's policy i The Tidö agreement would affect the students, including certain proposals regarding teacher training. SFS summarizes here how the government's budget bill for 2023 affects students.
Increased interest on student loans
Before the election, all government parties announced i SFS electoral compass that they opposed an increase in the interest rate on student loans. SFS has continued to raise this, most recently with one debate article in Svenska Dagbladet.
In the bill, it is now announced that the government is going ahead with a higher interest rate on student loans. The government thus breaks its election promise to the students. The interest rate must above all be raised to cover the increased costs that come from the new adjustment study support. SFS sees a great risk that skewed recruitment to higher education will increase.
The government also justifies the increase by saying that the student loan will be more like a regular loan. But equating the student loan with a regular loan is very surprising, as SFS also highlighted in our consultation response.
What does the increase mean in practice? As before, the interest rate will be decided annually by the Riksdag. But the interest rate for student loans will henceforth be calculated based on a new model. It must include that borrowers will pay for the estimated losses on the student loan. The losses have previously been largely paid for by the state.
According to the bill, the increase means that the surcharge on the interest rate for student loans will be 0,46%. However, it is difficult to say exactly what the increase will be. The central study support board, CSN, is tasked with producing an exact interest mark-up.
The interest rate increase applies to everyone with student loans taken out after 1989. To mitigate the consequences of the increased costs for the interest rate increase, those who took out loans between July 1, 2001 and December 31, 2021 can apply for changed payment terms. Then the borrower can have a new repayment period determined. The repayment period is set at a maximum of 25 years or the lower number of years remaining until the borrower turns 64. SFS has previously rejected the proposal in its entirety, but thinks it is good that the possibility exists for changed payment terms. However, SFS finds it noteworthy that this opportunity will not be given to new borrowers.
The tuition fee is (almost) adjusted against inflation
The study grant for 2023 increases by 8,7%, as it is adjusted against the price base amount. The function of the price base amount is that certain government subsidies must follow inflation. This is very important so that the supports do not erode over time. SFS believes that it is gratifying that the tuition fee is increased at a time when students have difficulty coping with finances. However, inflation has continued to increase – now it is at 9,7%. The increase is therefore not a real increase and insufficient to cover the students' increased costs. This was also raised by SFS chairman Linn Svärd this week. If students cannot live on the student aid, there is a great risk that more people will not complete their studies.
Reduced funds for education
According to SFS's calculations, the government's proposal involves a cut in the universities' reimbursement amount corresponding to 4,4%. There is a great risk that the courses will now deteriorate.
Due to the extremely high inflation in 2022, it will be particularly important that the enumeration also follows the cost increases. The grants must increase (in nominal terms) in order for the higher education institutions to be able to carry out the same activities as the year before. Otherwise, it is a cutback. The state's budget is calculated every year in a price and wage recalculation (PLO). This is how the general price and wage recalculation looks according to the government's financial plan for 2023:
Of the educational institutions salary costs is expected to increase by 0,49%. This includes a wage increase of 2,31% for each employee, something which in itself is quite low (unions in industry, for example, have requested 4,4% wage increases). From this, a productivity deduction of -1,82% is made, which constitutes a direct cut. Actually, the wage index would need to be around 3% to cover expected wage increases.
The institutes receive a 1,97% increase to cover their increase rental costs. It is at the same time as most universities expect rent increases of around 10% next year and is thus far from sufficient. Furthermore, the component “Other administrative expenses” by 2,16%. For example, it can be travel, various machines, computers and fixtures – costs that can be assumed to increase at roughly the same rate as general inflation. Therefore, it should really have been around 10%.
Various government operations have a mix of salary costs, premises costs and other costs. When you add it all up, the government's calculation lands at 1,36% for the higher education sector. Actually, it would have to be about 5,8% to cover the cost increases. It is difficult to see how the universities will be able to maintain the same quality of education despite this, which can essentially be described as a cut.
Fewer training places
The number of education places at universities and colleges is decreasing. This is primarily due to the fact that the temporary expansion in connection with the corona pandemic is being phased out.
The training places themselves are not a political decision, but it is strongly guided by the budget. Each higher education institution receives compensation up to a certain total level, the so-called ceiling amount. Although the compensation amounts (the "price tags") for the number of students and full-year achievements may correspond to a higher sum, the ceiling amount constitutes a limit to how high grants can be paid out.
If the price tags increase without the ceiling amount changing, it means in practice that a higher education institution can keep the education places with maintained grants. And if the ceiling amounts are reduced, the higher education institutions' income will fall and they may have to reduce the number of educational places. It is the universities that make decisions on the number of education places, but in practice they are strongly guided by the price tags and ceiling amounts.
During the pandemic, the colleges were expanded with more educational places, some of which were temporary. Already in the budget bill for 2022, which was put forward by the Social Democrats and the Green Party in government in 2021, the forecast was that the number of places would decrease in 2023. The new government's proposal regarding ceiling amounts is roughly in line with the previous government's calculations.
Since the fall of 2021, however, there have been important changes in the outside world that affect the demand for higher education: Last year's boom has been replaced by a downturn, and Finance Minister Elisabeth Svantesson has announced that she predicts that Sweden will likely enter a recession in 2023. An expected increase in unemployment in combination with larger cohorts leads to demand for education expected to increase over the next year. In 2022, the Riksdag has also decided to introduce a new transition study support for professionals, which will come into effect in 2023. According to some calculations, this will lead to an additional 20 individuals applying to university. The competition for the number of education places will thus become much tougher than we knew a year ago. It is likely to lead to crowding-out effects, where many young people are not admitted to the courses they want to attend.
Housing and construction
The investment support for new construction of rental housing and housing for students continues to be phased out. That is remarkable then the housing shortage for the country's students is great while the costs of building continue to rise. At the same time, the government says it wants to see reforms to increase construction. For this, a review of the Housing Authority's building and construction regulations is proposed. It remains to be seen whether this leads to more new construction at the same time as investment support continues to be phased out.
The government does not propose any changes to the housing allowance necessary for students. The government certainly proposes an extension of the temporary supplement to housing allowance for families with children, until 30 June 2023. It is good that a special support for families with children is available when living costs and the cost of housing are expected to increase.
But at the same time, no increase in the housing allowance is implemented. It is problematic when rent increases are to be expected for students and students' financial margins otherwise decrease. The government also does not proceed with the proposals from the Inquiry into housing allowance and maintenance support - reduced indebtedness and increased accuracy, BUMS, which would be necessary to increase the accuracy of the grant, especially for students. The proposals that the government does not proceed with include proposals for reduced indebtedness, which particularly affect students. The risk of being liable for repayment has SFS has previously shown that this is one of the main reasons students refrain from applying for housing allowance.
There are a number of other areas that affect many students to varying degrees.
In the budget bill, there is an investment of 2,1 billion to the regions for mental illness, which can benefit students. SFS lacks explicit investment in Student Health in the budget bill.
The allocation for sick pay and rehabilitation is reduced, which is used, among other things, for student sick periods. SFS hopes that the government will further investigate the issue of part-time sick leave for students during its term of office.
The authority, the University and Higher Education Council, UHR, receives reduced grants. The reduction is not justified in more detail in the bill, but is something that SFS will continue to monitor.
The state grant for student influence, which goes to the student unions so that they can conduct their activities, is proposed to remain at an unchanged level for the years 2023-2025. It is positive that the sum does not decrease, but we continue to request an increase with inflation. SFS has previously advocated an increase in the state subsidy, something that also UKÄ previously highlighted in a survey. An increase would have been particularly important now that inflation and increased costs for the student unions mean in reality that the value of the state grant decreases when it remains at the same level as in previous years.
The government grants for Competence lift for the climate change will be halved for 2023 and will be phased out completely by 2025. Competence lift for the climate change is an initiative for skills development which is considered to be particularly important for society's climate change and has, among other things, financed a task for universities to develop open online education and training for climate change. SFS takes a very negative view of this investment being phased out, as the need for skills enhancement is very great in order to cope with climate change. This is especially in combination with more general reduced funds for education as mentioned above. We know that research and education are central to climate change and welcome future proposals from the government on how these can be strengthened.
For the teacher training courses, the government announces that it intends to make efforts to raise the quality of education, as well as to get more people to apply for, start and be examined from the teacher training courses. The government also proposes to develop and expand the investment in practice schools and practice preschools within operational education (VFU) for preschool and teacher education.
The hospital physicist education is highlighted as a shortcoming, with the government proposing an investment to ensure the participation of the regions in the education, so that practical elements can be carried out.
In the bill, there is also a focus on education that will strengthen Sweden's preparedness, with proposals such as a special investment in research at the Norwegian Defense Academy, as well as strengthening naval officer training.