Pressure to redirect funds spent on student financing

Proposals to redirect funding from Denmark’s student financing system to universities, thus shifting more of the costs of higher education to students, have met with opposition from Akademikerne – the Danish Confederation of Professional Associations, an umbrella organisation with 25 associations and 336,000 members who are typically employees with an undergraduate or postgraduate degree.

In response to proposals to reduce the government contribution to the Danish students’ grants and loans scheme or SU, Akademikerne issued a communication recently entitled “Consequences of a reduction of the SU".

The confederation warned: "If the reduction of the SU system has as a consequence that Danish youth will have a weakened interest in taking a longer academic degree, and if the Danish completion rate should fall to the level of Norwegian masters students, that would mean 5,000 fewer graduates taking a masters degree compared to today.”

Economic, mobility, equity consequences

If the SU at masters level is changed from today’s grant model to a loan model, there is a risk that Denmark will lose DKK3 billion (US$457 million) due to a drop in the number of highly qualified graduates working in Denmark, Akademikerne said in a press release.

A reduction of the SU would also translate into weakened social mobility and inequality in society would increase, it said.

Evidence for these arguments is to be found in Education at a Glance (OECD 2013). On completion rates for masters degrees, Japan and Denmark ranked the highest with 90% and 81% respectively. France ranked as number three, with 80%, followed by Finland (78%) and Turkey (75%).

At the other end, with the lowest completion rates, were Hungary, the United States and Sweden, all with 53%, and Norway with 59%.

In 2015 Denmark had 20,000 masters degree candidates graduating.

Backdrop

The Akademikerne communication was a response to a process that started last autumn when Stina Vrang Elias, director of the think-tank DEA, called for re-orientation of the way Danish SU funding is spent:

“If the government wants to cut funding in higher education, it has a better option on its hands than heavy cuts to the budgets of universities. Today, we use as much money on student financing as we use in total investments in the higher education sector, DKK14.7 billion versus DKK14.8 billion.”

DEA is an independent, non-profit think tank based in Copenhagen, with the stated mission of promoting intelligent and effective investments in research, education and innovation that contribute to higher growth and productivity.

It was established in 2010 by the Danish Society for Education and Business, an association of commercial enterprises, with the objective of "serving Danish industry's competitive edge through science-based growth".

A background paper commissioned by DEA entitled Student Financial Aid and Student Behaviour in the Nordic Countries documented that Danish students had on average DKK96,930 (US$14,784) per year available after taxes. If Denmark was indexed to 100, the Norwegian average was 85, the Finnish 65 and the Swedish 81.

The paper also indicated that the share of students receiving financial aid who were also taking up a loan was 37% in Denmark, 42% in Finland, 97% in Norway and 73% in Sweden. Average debt upon graduation in 2013 was €15,574 in Denmark, €7,483 in Finland, €31,371 in Norway and €17,629 in Sweden.

Letter to the minister

In March the DEA’s argument was followed up by a letter from the association Axcelfuture to new Minister for Education and Science Ulla Tørnæs, worked out by the Axcelfuture advisory board headed by a former minister, Carsten Koch, and a high-profile team of industrialists and representatives from associations, among them DEA’s Elias.

One of the recommendations for a "more sustainable higher education system in Denmark is to strengthen the societal harvesting of our investment in higher education by transferring the resources from the SU to quality measures in higher education”.

The two-year masters degree could be transferred from a grant to a student loan, the advisory group of Axelfuture stated, also suggesting transferring the sixth SU year to a loan.

Commenting on the Axcelfuture proposal, Lars Qvistgaard of Akademikerne told Altinget, which provides news on Danish politics: “This will mean a fundamental end to free and equal opportunity in higher education.

“I think Axcelfuture is right in having a sharp focus on the quality of higher education. But I do not think that it is right that the young shall have to pay."

Tørnæs, the new education and science minister, said: "We have the best student financing system in the world and it is necessary to discuss its use.”