Sweeping student finance 'reforms' on the cards

Denmark’s student finance system is up for reform, with completion rates and the proportion of the total spend on education devoted to student loans the key targets.

Ministers are concerned that 85% of masters students do not complete on time and that spending on student loans – which grew to DKK17 billion (US$3 billion) in 2012 from DKK8 billion in 2001 – makes up 28% of the total investment.

While the increase is partly due to inflation and growth in student numbers, this is by far the highest proportion among OECD countries and is around three times the average proportion of the government education budget devoted to student loans and grants.

A quarter of students are in work that pays them so much that they exceed the monthly income threshold and therefore do not qualify for financial support for a year or more, potentially delaying their studies and increasing the drop-out rate.

The government is soon to publish proposals for reform of the present system (SU-system) to encourage students to start their studies earlier and complete on time, while increasing higher education attainment.

A differentiated level of support giving more to students of engineering and technology has been suggested by some observers.

The key political objective is to increase the supply of workers with higher education and strengthen economic growth.

Prime Minister Helle Thorning-Schmidt said in her New Year speech to the Danish people: “It is not most important what education you choose; the most important is that you take an education.

“To you who are taking a higher education I would say: 'We are expecting that you are lifting your responsibilities. You have to get through higher education quicker than today. We need you. You have to prepare for changes.'”

Education Minister Morten Østergaard has indicated that the government will set out its proposals during parliament’s spring term.

The discussions on the technicalities of the Danish student finance system are centered on two main issues: how to increase the attainment of students from lower-income families in higher education, and how to ensure that more – especially masters – students graduate in the set number of years.

In the background are the government’s austerity measures and whether student loan and grant arrangements shall be exempted from cuts.

There is already strong political pressure to increase the proportion of students completing their degrees on time, and the target proportion is specified in each institution’s annual development contract with the ministry.

The Danish Chamber of Commerce (DE) has called for the regulation that allows student to delay their studies by one year and still receive full support – fjumreåret or the 'delay year – to be scrapped. The DE claims this alone would release DKK2.7 billion a year for quality improvements.

Professor Jan Rose Saksen of the Danish Business School and chief executive officer of the regional think-thank KORA, wrote in the Jyllandsposten that SU-system support should be differentiated, to distribute more in fields that create more economic growth, like engineering and technology.

Analysis from the European Research Area Committee backs similar actions: “One key issue is that the government does not seem to have a decisive role in directing universities in providing the range and types of skills required by the labour market, while the development and anticipation of educational needs, particularly in addressing the requirements of the business sector, are fragmented and not systematically organised.

“Linked to this is a lack of suitably qualified engineers and technicians entering the public and private research sectors, which might be partially addressed through the introduction of a differentiated student grants system.

"Denmark also exhibits an historical lack of employability among its highly educated graduates, which again suggests that further policy attention should be paid to the design and development of curricula.

“Another issue concerns the age of those graduating from the higher education system, a feature that may be related to the generous Danish grants system.”

DE spokesperson Jannik Schak Linneman said: “When the economic crisis is at our door, we have to get rid of the attitude that everybody should choose their education according to their preferences.”

But Jakob Ruggaard, president of the National Union of Students, said: “The SU-system is the best in the world. It is due to this system that so many of the Danish youth, regardless of their background, commence and complete higher education.

“Reports shows that Denmark has one of the highest percentages of students completing their education (more than 85%) and that students receiving SU are finishing their studies quicker than students not receiving SU, for example because they work too much.

“There are most often good reasons for students getting delayed. For example, they get sick, they fail an exam, they change courses or they cannot get the full credit for an internship or exchange semester," Ruggaard told University World News. Removing the sixth and extra SU-year would only delay students further or prevent them from completing their education.

A think-tank dedicated to the link between economic growth and investment in education, DEA, issued a report in November comparing Danish student behaviour with that of students in a number of European countries, including Finland, Norway and The Netherlands.

How are Incentives for Students Affected by SU-reforms? – An international comparison (in Danish only) found that, in Finland and The Netherlands, removing the 'delay year' helped students complete degree requirements in time and increased study effort.

On the other hand, cuts meant a smaller intake and higher dropout rates.

Stina Vrang Elias, managing director of the DEA, told University World News: “We have to check if there are sufficient incentives in our present SU-system, so that students have an eye to finish their studies earlier.

“The young do not, as a rule, choose an education that takes longer than the education requires. DEA is in favour of a reform of the SU-system that can cater for those study groups that are in risk of greater dropout. The 'delay year' should be an exception, not the rule.”

One of the main issues addressed in the current discussion is how degree completion on time can be improved. As things stand, Danish students are not rewarded individually if they fulfil the degree requirements on time, as they are in Norway, but institutions are awarded a bonus.

Copenhagen University produced 7,799 graduates in 2012 and in return will receive a bonus of DKK158 million for the half that meet the time requirement.

There is a strong imbalance between different faculties and between bachelor and masters graduates. While 80% of bachelor degree students complete on time, only 21% of masters students do. For masters candidates, only 6% in the humanities complete on time, compared with 12% in law, 28% in natural sciences, 13% in social sciences, 35% in health, 20% in theology, 35% in bioscience and 47% in pharmacy.