Government intends to convert half of SU into a loan

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A large part of the financing of the Danish government's 2025 plan is to be found in savings in the Danish Students’ Grants and Loans Scheme (SU). The government will cut the monthly SU grant from DKK 5,100 to DKK 4,300, instead giving students the opportunity to loan more. At the press conference, Minister for Higher Education and Science Ulla Tørnæs described the billion kroner savings in SU as ‘fair’, and the annual student loan of DKK 50,000 as 'a good investment'.

2016.09.12 | Lea Laursen Pasgaard

Minister for Higher Education and Science Ulla Tørnæs recently presented the Danish government's 2025 plan, which proposes savings of DKK 3.3 billion on the Education Grant and Loan Scheme (SU). Photo: Lea Laursen Pasgaard

She also said that spending just as much money on paying SU to the students as the country spends on the actual study programmes demonstrates skewed prioritising. This was the message from Minister for Higher Education and Science Ulla Tørnæs (Denmark’s Liberal Party) as she presented the government's proposal for a new SU system at a press conference.

As part of its 2025 plan, the government proposes making savings of DKK 3.3 billion on SU. This will be achieved by converting half of SU into a loan, and by doing away with the sixth year of SU. This will mean that students will only be able to receive SU for the prescribed length of time of their degree programme, which is typically five years. On the other hand, the government will increase the employment allowance, so that students have the opportunity to earn up to DKK 1,000 per month from study jobs.

Minister calls billion kroner savings 'fair'

At the press conference, Ulla Tørnæs was asked whether she sees the government’s plans for SU savings of DKK 3.3 billion as a worsening or improvement of the Danish SU system. She replied:

"It’s a more robust SU system that will hopefully contribute towards ensuring that we’re not a magnet for foreign students who come to Denmark to get a free education and also to receive SU.”

Tørnæs pointed out that Denmark currently has the most generous students’ grants and loan system in the world, and that after the restructuring, Denmark will still have a very generous SU system compared with the other Nordic countries, which have lower SU than in Denmark. 

"I think it's a fair restructuring and a fair SU system which makes a lot of sense for Danish society," said the minister.

 

Government proposals for a new grant and loan system:

1: Equal part grants and loans – a system that is closer to the other Nordic countries.

2. Possibility of an interest-free loan while studying.

3. Increased maximum for private earnings after tax, allowing students to earn up to DKK 1,000 more than currently.

4. Grants and loans limited to the prescribed time to degree.

5. Increased employment allowance for up to three years after completed degree programme.

6. A continuation of the present regulation of the scheme.

Changes to the scheme will apply to those students who begin a study programme after mid-2019.

Source: The government’s Education Grant and Loan Scheme proposal from the Master Plan for 2025 (in Danish).

The Danish government's milestones for the educational area: 


1. Better match between study programme and companies' demand for competences.

2. A well-educated workforce with more years in the labour market. 

3. New graduates to find work quickly. 

4. Increased quality and learning outcomes from the study programmes.

5. Better access to good study programmes in all regions.

Source: The government’s Education Grant and Loan Scheme proposal from the Master Plan for 2025 (in Danish).

Same living standard as to day - if you go into debt

In its plan for what it describes as a "more robust SU system”, the Danish government proposes a twenty per cent reduction in the level of SU compared to today. This means that a student living away from home will only receive a monthly grant payment of DKK 4,300 in the form of SU, instead of the DKK 5,100 they receive today. At the same time, students will in future be able to take a loan of up to DKK 4,300 a month, instead of the DKK 3,000 that they can currently loan. The students thus have the chance to maintain the same standard of living as today – but this will mean that they will have to go into debt as a student.

Minister on the subject of loans: Education is an investment

When asked directly at the press conference whether she thinks it is desirable for young people in Denmark to go into debt, Ulla Tørnæs replied:

"I think the model we’re proposing is very fair. What we need to remember is that taking an education is an investment. It’s an investment for society and for the individual person who invests time and resources in completing a higher education degree programme.” 

If students opt to take the full loan amount, they will accumulate debt of around DKK 50,000 a year. The minister did not directly answer a question about whether she wished to encourage young people to put themselves into debt:

"We can always do different calculations. The DKK 50,000 per year can end up being a really, really good investment for anyone who can look forward to long career with a good salary."

Free and equal acces to education

Mette Frederiksen, chair of the Social Democratic Party, was quick to criticise the government's SU proposal. She wrote the following on her Facebook page:

"The government breaks with the principal of free and equal access to education. We are against that."

Neither was the chair the Socialist People’s Party (SF) Pia Olsen Dyhr enthusiastic about the plan. On her profile she wrote:

"The government’s plan can only be described as a massive generational theft! The government hits ALL educations hard with lower SU and more loans. From the young man who has just about been persuaded to begin vocational training, to the 27-year-old woman who has found out that she will get an education as an adult. And the educational system in general. This is completely nuts! It harms social mobility. It is damaging for Denmark, as we live off of the knowledge that our young people have, they are our raw material!"

However, Ulla Tørnæs does not accept this criticism. At the press conference she said several times that the crucial factor for her is that Danish students have free and equal access to education. She also believes that young people in Denmark will continue to have this if the government's plan for a new SU system is implemented.

"Free in that you can take a higher education degree programme today for free, and equal because there are equal conditions for admittance to higher education degree programmes," explained the minister.

Tørnæs rejects social imbalance

Ulla Tørnæs does not agree with the criticism from the Social Democratic Party and others that the plan is a break with the Danish SU system, or that the new model will be socially imbalanced.

"There is absolutely no research-based evidence for that. I note that recognised economists have recently emphasised that there is nothing to suggest or demonstrate that precisely the manner in which we’ve organised our SU system contributes to social mobility. This is what Nina Smith (economics professor at AU, ed.) said the other day, and Carsten Koch (economist, former Social Democratic minister and current chair of the Employment Council, ed.) has said the same. Other recognised economists have also pointed to the same fact," said the minister.

Students fear drop-outs - the minister does not

The National Union of Students in Denmark fear that the government's SU model will increase the students' drop-out rates, but Tørnæs also rejected this worry. She underlined that the government will do everything in its powers to reduce the drop-out rate in higher education degree programmes. Today, one out of every six students drop out of their degree programme. The Ministry of Higher Education and Science has commissioned an analysis to identify the cause of drop-outs. Accord to Tørnæs, however, there is nothing to suggest that SU is the cause.

"There’s nothing at all to suggest that this is in any way crucial for the drop-out rate from our study programmes. No studies or research has been done on this, except for some analyses of the SU reform back in 1988, where the SU framework was increased by sixty per cent. This showed that it was significant for certain social groups’ completion of a higher education degree programme, but there is nothing newer that shows this is crucial for completion."

Tørnæs rejects broken promises accusation

Even though the Prime Minister back in June stated that the government had no current proposals for changing the SU system, neither he nor Ulla Tørnæs believe that the government has broken any promises with its proposal to change the SU system.

"What we said was that there was no plan to change the SU system. And there wasn’t any plan last year, as the plan was first drawn up over the past few months," said Tørnæs.

"As the Prime Minister said in his earlier press conference, we can’t have a situation where all development and progress ceases at the start of an election campaign. Or where that what was said back then is now cast in cement."

The Danish government's Finance Act proposals and the 2025 plan are proposals – and the political negotiations are now underway.

Government proposal for changes to the Danish grant and loan scheme (SU)

 

 Current rules

 Government proposal

 Amount after tax

 DKK 5,100

 DKK 4,300

 Possible student loan (not subject to taxation)  

 DKK 3,000

 DKK 4,300

 Private earnings maximum after tax (the limit for how much a student is allowed to earn in addition to SU) 

  DKK 7,200

 DKK 7,800 

 Total potential income after tax 

 DKK 15,300

 DKK 16,500 DKK 16,500


Translated by Peter Lambourne.

 

     

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