Norway’s student funding model not the answer, study says

Akademikerne,the Danish Confederation of Professional Associations, has been investigating the Norwegian student financing system and its impact on the social mobility of education to see if it has a built-in social bias and whether the findings might be useful for informing higher education funding reform in Denmark.

“The Norwegian student financing model is the rabbit in the hat that Danish politicians refer to when they call for changing the Danish student financing model,” Akademikerne told the media, when introducing their investigation last month.

Both Denmark and Norway introduced a state educational student financial support scheme after World War Two, but the Danish SU scheme today awards a significantly greater part of it as a non-repayable grant while the Norwegian model is based mainly on a loan, with repayment of a portion of funding conditional on the student following the study programme and passing the exams in the expected timeframe.

Danish students in 2019 were given DKK6,166 (US$918) in grants per month, while Norwegian students only received DKK3,242 (US$482). In total a Danish student is given DKK9,321 per month in SU support per month, while a Norwegian student receives DKK8,105.

The current debate in Denmark centres on the question of whether changing the grant/loan proportion will increase social inequity in recruitment to higher education at a time when the Social Democratic government in Denmark, Akademikerne and the Ministry of Finance, among others, are monitoring statistical trends to keep a close eye on higher education recruitment.

Akademikerne says people in Denmark who support the Norwegian model of student funding claim that if a country like Norway can have a loan-based SU, this must also be feasible for Denmark.

Stina Vrang Elias, director of the Danish think-tank DEA, for instance has repeatedly called for reform, because the Danish SU is soaking up more and more public funding.

“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. In the period 2006 to 2016 the SU grant costs increased from DKK8.7 billion to DKK15 billion,” Vrang Elias said.

Akademikerne Chief Adviser Birgit Bangskjær told University World News: “The new comparison study of the Nordic countries looks very interesting, but for the Danish debate on whether or not to reform the student support system, the effect on social mobility in education is crucial.”

Implicit in the debate is the belief that the Norwegian system does not have a social bias, Bangskjær said. “Since this lies at the heart of the Danish political debate, the question is whether the Norwegian system does have such a built-in social bias.”

Negative impact

Data found in the Akademikerne investigation that a greater emphasis on a loan-based system does have a negative impact upon the social mobility patterns in Norway.

For example, it has become more difficult for the Norwegian young population with parents from lower educational backgrounds to complete a higher education since the Norwegian student financial support reforms in 2002, which awarded a greater proportion of the support as a loan.

“Norwegian students of parents with lower educational backgrounds are using significantly more time working alongside studying compared to their student colleagues of parents with higher education,” the investigation found.

Comparing the cohort of students starting their studies in 1998 with the cohort of 2010, the investigation found that in the 1998 group among those with parents with lower education 43% had not completed their degree eight years after starting, while in the 2010 group this had increased to 52%.

Also, the less wealthy the Norwegian student family background is, the more necessary the student is finding it to work alongside studying. This means that the Norwegian students from less wealthy backgrounds are studying on a more part-time basis, which also is the main reason for their higher drop-out rate, the report said.

Students from families with high educational backgrounds, however, have improved their educational attainment from 2002.

“Based on this, it is not surprising that Denmark is performing significantly better than Norway with regard to the level of education of the population: 65% of the Danish population will during their lifetime achieve a higher education degree compared to 46% of the Norwegian population,” the report said.

“And the completion rate of the first higher education degree is 47% in Denmark compared with 38% in Norway. Also, 22% of the population in Denmark aged 30-34 years has a masters degree today compared with 17% in Norway,” the report also said.

The finding raises the interesting question of why Norway, with four decades of oil revenue, has not switched to a model in which there was a higher proportion of grant.

It remains to be seen if the new Danish government led by the Social Democratic Party will look to reform the SU system. The Norwegian comparison now being made by Akademikerne is part of the ongoing debate on whether Danish SU reforms would benefit Danish higher education.

Housing costs eating up financing

Parallel to the Danish investigation, the National Union of Students in Norway or NSO published a note saying that housing costs are eating up a constantly increasing part of the student funding received from the government.

Based on figures from Statistics Norway, housing costs have increased significantly in 2019. On average, a one-room apartment now costs NOK7,890 (US$887) per month and in Oslo the cost is NOK8,930.

“As a consequence of the increasing housing prices, students are forced to spend more time working alongside their studies and hence spend less time on their studies,” NSO President Marte Øien said.

“A student gets NOK11,020 per month. A student in Oslo will have NOK2,090 to live for each month and a student in the rest of Norway NOK3,130. Students have to prioritise between work and studies and we know that for many this means not succeeding with their studies,” Øien said.