This morning, the government, together with the Sweden Democrats, presented their State budget proposal 2024It is the first budget bill negotiated within the framework of the Tidö Agreement.
Minister of Finance Elisabeth Svantesson describes that we are entering an economic winter, and the government assesses that the Swedish economy is in a recession with continued high inflation. At the same time, most industries describe great difficulties in recruiting the right skills. To meet the crisis, investments and efforts in higher education are needed, to equip more students with skills that will be needed when the economy turns around. However, the Tidö parties are doing the opposite, with the priorities presented in the budget bill. Instead, the financing of student influence is being attacked, and higher education is being cut by 420 million kronor.
SFS has reviewed the state budget for 2024 and summarizes how it affects students.
Attack on student union funding from 2026
The statutory student influence in Sweden is carried out through student unions and by SFS. Most of the activities are financed through direct government grants, and a smaller proportion is through membership fees. This is a system that was introduced in connection with the abolition of compulsory union membership in 2010, when political decisions led to a large reduction in the number of student union members. One condition for the reform was that the unions' reduced income from membership fees would be compensated by a government grant. The government grant is to cover the student unions' statutory core mission of conducting educational monitoring.
The budget bill states that the government intends to reduce appropriation 2:67 in the state budget by SEK 20 million, from SEK 67,780 thousand to SEK 47,780 thousand, starting in the 2026 budget year. Of the current SEK 67,780 thousand within appropriation 2:67, SEK 60,059 thousand goes to student influence and SEK 7,304 thousand goes to other purposes. This means that the contribution to student influence will decrease by at least SEK 12,7 million. However, our concern is that the entire reduction of SEK 20 million is directed at the student movement, which would mean a reduction in the contribution to student influence by one third.
Here we don't even take into account that inflation erodes the remaining part of the allocation, as it is not listed at all for 2024.
420 million in cuts
According to SFS calculations, the government's budget proposal entails a cut in higher education institutions' education funding of approximately SEK 420 million. The cuts consist of 0,5% in general savings within higher education, and a 1,84% efficiency requirement on higher education institutions' salary costs.
The cuts relate to a certain extent to a reduction in the number of places, but otherwise it will be felt by students in the form of fewer teachers and less teacher-led time.
General savings in higher education
The budget proposal states: “All appropriations for education at the undergraduate and graduate levels and research and education at the doctoral level within the section are reduced by 0,5 percent.” As we interpret the budget, this saving consists partly of a reduction in the number of education places corresponding to SEK 105 million, and partly of a general cut of SEK 55 million, both in appropriations 2:64.
The effect of inflation on funding for education and research
Inflation has remained high in 2023 and was low in August at 7,5% (CPI). Funding must be increased in line with inflation in order for higher education institutions to be able to operate the same as the previous year. Otherwise, it is a cut. For universities and colleges, the increase this year is based on a Higher Education Index of 3,5%.
An increase of 3,5% when inflation is at 7,5%. Does that mean that the difference of a full 4% disappears from the universities' funding? No, it's not quite that simple...
The total allocation is calculated based on a number of different expenses:
According to the government's calculations, salaries per employee in the state are expected to increase by 2,93% in 2024. At the same time, the government believes that there is room to impose an efficiency requirement in the form of a "productivity deduction" of 1,84% on personnel costs. The productivity deduction has been a recurring feature in the state budget since the 1990s, and in the long term will lead to a significant erosion of resources.
In addition, compensation for increased premises costs is provided through a rental index, which this year is 7,6%.
Finally, there is an index for “other administrative costs”, which is calculated for costs that do not relate to salaries or rent. This year, that item is increased by 8,37%, which is slightly more than the latest inflation figures.
The reason why the higher education index is only increased by 3,5% depends on how these costs are added together. Just over 60% of the higher education institutions' costs consist of salaries, premises constitute just under 30%, and other costs just under 10%. This means that the salary index, which is significantly below inflation, has a major impact on the calculation. Even if we accept this calculation, large sums are missing that disappear due to the productivity deduction: The increase would need to be 4,7% to cover the higher education institutions' salary costs. The appropriations for education at the basic and advanced levels amount to SEK 30 billion in 2024. The missing 1,2% corresponds to SEK 360 million.
This means that 360 million SEK will disappear from education appropriations due to the productivity deduction.
Study funds
The student allowance for 2024 will increase by 8,33%, as it is adjusted against the price base amount. The function of the price base amount is to ensure that certain government subsidies follow inflation. This is very important so that the subsidies are not eroded over time. The inflation rate has varied during the year but was 7,5% in August, a decrease from July when the inflation rate was 9,3%. In that sense, the increase in the student allowance is an adjustment of the student allowance's previous purchasing power.
At the same time, for example, food prices have increased by 21% since January 2022, which is a major expense for students.
The new interest rate model introduced for 2023, which meant an increase in the interest rate on student loans, remains in place. SFS has strongly opposed this interest rate increase. Last year, it meant that the interest rate was increased from 0 to 0,59%. The interest rate for 2024 will not be determined until 1 January 2024, but is expected to be increased further. The new interest rate model results in the state's expected losses on student loans decreasing, which is visible in this budget. This has been financed by the interest rate surcharge for borrowers that was introduced in 2023.
The government has previously announced increased funding for CSN for the administration of the transition study grant of SEK 50 million. At the same time, however, general savings are being made in the state administration, which at the same time reduces the allocation to CSN by SEK 11 million, and a reduction of SEK 190,000 for the Student Aid Appeals Board.
Investment in engineering education
The government has previously announced an investment in technical education, in the form of more places and a corresponding expansion of the study fund. The compensation amount for the Natural Sciences, Technology, Pharmaceutical education area is being increased by 1,6%, in addition to the 3,5% increase made for all compensation amounts. At the same time, a targeted expansion of SEK 49 million is being made for more places in engineering education. In addition, a broader investment in advanced level education is being made of SEK 74 million.
To enable more people to take a qualifying education and begin an engineering education, the government is allocating SEK 23 million for a technical base year.
The government also wants to expand the opportunity for engineers to further their education, and is therefore introducing development funds totaling SEK 30 million to develop short courses for professionals, which will be used for courses focusing on batteries, technology and green transition.
However, it is important to remember that all areas of education are affected by general cuts and efficiency requirements, including technical education. The investments described here will therefore be partly eaten up by cuts and missed increases.
Housing allowance and housing
Housing allowance
The housing allowance is not automatically adjusted against the price base amount and no increases in the allowance are announced. With the cost increases and inflation, this means in practice a reduction in the housing allowance. The allocation for the housing allowance is at an unchanged level for 2024, but is announced to decrease in future years when the temporary additional allowance is removed.
The temporary increase in the supplementary allowance for families with children will be extended until June 2024.
The government has announced that it intends to come back with a proposal to introduce monthly data as an income basis when calculating housing allowance. This is very positive as the current system leads to a high risk of debt for students, which SFS repeatedly highlights. However, it remains to be seen whether it will actually be introduced.
Housing
The investment support is still being phased out and is expected to be fully phased out by 2026. The government justifies this by saying that costly subsidies will not solve the housing shortage. At the same time, the government notes that more housing is needed. The Swedish National Board of Housing, Building and Planning forecasts that the number of completed housing will decrease significantly in 2024 and the coming years.
It is therefore particularly noteworthy that no government incentives for increased new construction are announced in the budget bill.
Temporary support for conversions from, for example, offices to housing is being introduced at SEK 20 million, rising to SEK 25 million in the coming years. Temporary support is also being introduced for municipalities to plan more buildable land, especially for single-family homes, at SEK 60 million.
There is a general housing shortage in Sweden. All types of housing are needed. However, most students live in apartment buildings. The focus on increased single-family home construction when new construction of apartment buildings is at a standstill is therefore a priority that is contrary to the needs of students. In addition, the phase-out of support for energy efficiency in apartment buildings continues. The fact that housing policy is directed towards prioritizing housing that few students have the opportunity to use is the wrong way to go.
Expansion of YH
The government and the Sweden Democrats have previously presented an expansion of the university of applied sciences. In the budget bill, the government states that it is prioritizing funds for more places both within the university of applied sciences and vocational adult education.
The investment involves approximately 3,000 places at the university of applied sciences and 16,500 places in regional vocational education. The expansion of the university of applied sciences is particularly interesting, as it is sometimes described as an alternative to certain higher education programmes. A report has recently proposed developing university of applied sciences programmes as an extension to higher education. The expansion of university of applied sciences may therefore affect students in higher education in the long term. The allocation for the Swedish Agency for University of Applied Sciences (MYH) is being increased by SEK 15 million for 2024, linked to the expansion.
VFU
We already know that the regions' ability to accept students for work-based learning (VFU) is affected by how strained the operations are in general. It remains to be seen whether the regions' ability to accept VFU students is affected by the regions' increasingly strained finances.
The budget bill does not contain much about VFU. The compensation amount for VFU is increased in the same way as other compensation amounts, by 3,5%.
The government mentions in the budget proposal that a special investigator, who will function as a national coordinator, has previously been assigned to support universities, health and medical authorities and healthcare providers in collaboration around VFU.
Other
Much of the government's research policy will be presented in the research bill that will be presented in the autumn of 2024. The budget bill mentions, among other things, that the government intends to steer more towards excellent research rather than breadth. Otherwise, no news in the research area is presented that is considered to have any major effect on education at the undergraduate and postgraduate levels.
University and College Council will receive reduced funding in the coming year. However, for the work on a web portal for student health, UHR's funding will be increased by SEK 1,000,000 from 2024.
The higher contribution to certain students who continue their studies after introductory program in high school be discontinued.
The government also announces that they intend to expand medical school starting in 2027, i.e. after the next election.
The higher education institutions with ongoing trials with a new shorter supplementary pedagogical training (KPU) will receive some increase in targeted funds, and the budget bill states that shorter KPU should be expanded to more universities and more people should be able to study within shorter KPU.
A Cyber campus will be established at the Royal Institute of Technology, with the aim of strengthening both society's defense capability and Sweden's competitiveness.
Something about the future
The budget bill for 2024 results in the number of places available in higher education programmes decreasing. This partly reflects a reduced application pressure in the past year. At the same time, it is worrying for the future. In the coming years, the application pressure for higher education is expected to increase. Partly as a result of the fact that increasingly large cohorts of young people are expected to graduate from upper secondary school, and partly in combination with an increasing number of professionals seeking further education. 
In order to be able to meet the increased application pressure, higher education institutions need to be prepared. The alternative is that the proportion of the population that goes on to higher education decreases. With a reduced number of educational places, the preparedness of higher education institutions decreases and the opportunities to meet the skills shortage are significantly reduced. This is not what Sweden as a knowledge nation needs. Especially not when it happens in combination with increasingly less teacher-led time and greatly weakened conditions for pursuing student influence. This budget bill leaves a lot to be desired, to say the least.