This morning the government presented its proposed 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 education expanded because few more people are in employment. But the government's budget bill contains no proposals that contribute to more people applying for higher education - on the contrary, several proposals are directly harmful to Sweden's future as a knowledge nation.
SFS has previously commented on how the new government's policy in The Tidö Agreement would affect students, including certain proposals regarding teacher education. SFS summarizes here how the government's budget bill for 2023 affects students.
Higher interest rates on student loans
Before the election, all the governing parties in SFS election compass that they opposed an increase in the interest rate on student loansSFS has continued to highlight this, most recently with a debate article in Svenska Dagbladet.
The bill now announces that the government is moving forward with a higher interest rate on student loans. The government is thus breaking its election promise to students. The interest rate will primarily be raised to cover the increased costs resulting from the new adjustment study support. SFS sees a major risk that biased recruitment to higher education will increase.
The government also justifies the increase by saying that the student loan should be more like a regular loan. But equating the student loan to a regular loan is very surprising, as SFS also highlighted in our consultation response.
What does the increase mean in practice? The interest rate will, as before, be decided annually by the Riksdag. However, the interest rate for student loans will henceforth be calculated based on a new model. It will include that borrowers will pay for the estimated losses on the student loan. The losses have previously been largely paid by the state.
According to the bill, the increase means that the mark-up 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 Student Aid Board, CSN, has been tasked with developing 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 of the interest rate increase, those who took out loans between 1 July 2001 and 31 December 2021 can apply for changed payment terms. The borrower can then have a new repayment period set. 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 there is a possibility for changed payment terms. However, SFS thinks it is remarkable that this possibility will not be given to new borrowers.
The student allowance is adjusted (almost) for inflation.
The study grant for 2023 will increase by 8,7%, as it is adjusted against the price base amount. The function of the price base amount is that certain government subsidies should follow inflation. This is very important so that the subsidies are not eroded over time. SFS believes that it is gratifying that the study grant is being increased at a time when students are having difficulty making ends meet. However, inflation has continued to increase – it is now 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 their study funds, there is a great risk that more will not complete their studies.
Reduced funding for education
According to SFS calculations, the government's proposal means a cut in the universities' compensation amount equivalent to 4,4%. There is a great risk that the education will now deteriorate.
Due to the exceptionally high inflation in 2022, it will be particularly important that the increase also follows the cost increases. The appropriations must increase (in nominal terms) in order for the higher education institutions to be able to conduct the same operations as the year before. Otherwise, it is a cut. The state budget is increased every year in a price and wage adjustment (PLO). This is how the general price and wage adjustment looks like according to the government's financial plan for 2023:
The universities salary costs is expected to increase by 0,49%. This includes a wage increase of 2,31% for each employee, which is quite low in itself (for example, the unions in industry have requested 4,4% wage increases). From this, a productivity deduction of -1,82% is made, which constitutes a direct cut. In reality, the wage index would need to be around 3% to cover expected wage increases.
Higher education institutions will receive a 1,97% increase to cover their increased rental costs. It is at the same time that most Universities expect rent increases of around 10% next year and is therefore far from sufficient. Furthermore, the component “other management costs" by 2,16%. For example, these could be travel, various machines, computers and equipment - costs that can be assumed to increase at about the same rate as general inflation. Therefore, it really should have been around 10%.
Various government operations have a mix of salary costs, premises costs and other costs. When you add everything up, the government's increase ends up at 1,36% for the higher education sector. Actually, it would need to be around 5,8% to cover the cost increases. It is difficult to see how the higher education institutions 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 educational places at universities and colleges is decreasing. This is primarily due to the phasing out of the temporary expansion in connection with the corona pandemic.
The number of study places per se is not a political decision, but it is strongly governed by the budget. Each higher education institution receives compensation up to a certain total level, the so-called ceiling amount. Although the compensation amounts (“price tags”) for the number of students and full-year performance 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 changing the ceiling amount, this means in practice that an institution of higher education can maintain the educational places with the same funding. And if the ceiling amounts decrease, the income of the institutions of higher education will decrease and they may have to reduce the number of educational places. It is the institutions of higher education that make the decisions about the number of educational places, but in practice they are strongly guided by the price tags and the ceiling amounts.
During the pandemic, higher education institutions expanded with more places, some of which were temporary. Already in the budget bill for 2022, which was presented 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 the ceiling amount is roughly in line with the previous government's calculations.
Since autumn 2021, however, there have been important changes in the 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 combined with larger cohorts means that the demand for education expected to increase next year. In 2022, the Riksdag has also decided to introduce a new transition study support for professionals, which will come into force in 2023. According to some calculations, this will lead to an additional 20,000 individuals applying to higher education. The competition for the number of study places will therefore be significantly more intense than we knew a year ago. This will likely lead to crowding out effects, where many young people are not admitted to the courses they want to take.
Housing and construction
Investment support for new construction of rental housing and student housing continues to be phased out. This is notable because The housing shortage for the country's students is great. while the costs of building continue to increase. At the same time, the government says that it wants to see reforms to increase construction. For this, a review of the Swedish National Board of Housing, Building and Planning's building and construction regulations is proposed. It remains to be seen whether this leads to more new construction while investment support continues to be phased out.
The government is not proposing any of the changes to the housing allowance that are necessary for students. The government is certainly proposing an extension of the temporary supplement to the housing allowance for families with children, until 30 June 2023. It is good that special support for families with children is available when the cost of living and housing is expected to increase.
But at the same time, no increase in housing allowance is being implemented. This is problematic when rent increases are expected for students and students' financial margins are otherwise decreasing. The government is also not proceeding 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 allowance, especially for students. The proposals that the government is not proceeding with include proposals for reduced indebtedness, which particularly affects students. The risk of being required to repay has SFS has previously shown that this is one of the main reasons why students refrain from applying for housing benefit..
Other
There are a number of other areas that affect many students to varying degrees.
The budget bill includes an investment of 2,1 billion to the regions for mental health, which could benefit students. SFS lacks explicit investments in Student Health in the budget bill.
The allocation for sick pay and rehabilitation, which is used for students' sick leave, among other things, is being reduced. SFS hopes that the government will further investigate the issue of part-time sick leave for students during its term of office.
The Swedish Council for Universities, UHR, will receive reduced funding. The reduction is not justified in more detail in the bill, but is something that SFS will continue to monitor.
The government grant for student influence, which goes to student unions to enable them to conduct their activities, is proposed to remain at an unchanged level for the years 2023-2025. It is positive that the amount will not decrease, but we continue to demand an increase in line with inflation. SFS has previously advocated an increase in the government grant, which is also UKÄ previously highlighted in a surveyAn increase would have been particularly important now that inflation and increased costs for student unions in reality mean that the value of the government grant is decreasing when it remains at the same level as in previous years.
The government funding for the Skills Boost for Climate Transition will be halved for 2023 and will be phased out completely by 2025. The Skills Boost for Climate Transition is an initiative for skills development that is considered particularly important for society's climate transition and has, among other things, financed a mission to higher education institutions to develop open online education and training for climate transition. SFS views this initiative very negatively as the need for skills reinforcement is very great in order to cope with the climate transition. This is especially in combination with more general reduced funding for education as mentioned above. We know that research and education are central to the climate transition and welcome future proposals from the government on how these can be strengthened.
For teacher training, the government announces that it intends to make efforts to raise the quality of education, and to get more people to apply, start and graduate from teacher training. The government also proposes to develop and expand the investment in practice schools and practice preschools within workplace-based education (VFU) for preschool teacher and teacher training.
Hospital physicist training is highlighted as a shortage area, with the government proposing an initiative to ensure the regions' participation in the training, so that practical elements can be implemented.
The bill also focuses on training that will strengthen Sweden's preparedness, with proposals such as a special focus on research at the Swedish National Defence University, as well as strengthening naval officer training.