The High Price of a Free College Education in Sweden

[TITAN308]

Umm no lol. Evidently youve never bought a house. At 3.5% interest on a 30 year fix isn't just 3.5% overall. It's annually. So for a $300,000 home you'd wind up paying over $200,000 in interest over 30 years. So how exactly is that better if you have the capability of paying cash? Sounds like a terrible financial opinion.

I love the chumps now going for 6, 7, 8, 9, and even 10 year car loans.

[lockedout]

I love the chumps now going for 6, 7, 8, 9, and even 10 year car loans.

How is a 10 year car loan even legal?

[Grim Retailer]

From what I've seen, in-state tuition for most schools here falls under yearly cost of living for EU. That's including room and board. There are some schools that obviously cost more, but you are paying for the name of the school more than anything. Still if I knew more about EU schools, I guarantee there are some schools that charge more than "free" or there are associated costs that just aren't known or spoken about here.

From what Xar226 posted earlier in this thread, living expenses are not automatically included in US tuition fees, but are additional costs.

So assuming the system in Sweden is similar to Norway, a Swedish student pays nothing for tuition and a sum for living expenses. An American student pays a similar or slightly lower amount for living expenses and a far larger one for for tuition. Additionally, the repayment conditions are much harsher than the Swedish ones, I believe. These two are not close to even.

[Independent voter]

From what Xar226 posted earlier in this thread, living expenses are not automatically included in US tuition fees, but are additional costs.

So assuming the system in Sweden is similar to Norway, a Swedish student pays nothing for tuition and a sum for living expenses. An American student pays a similar or slightly lower amount for living expenses and a far larger one for for tuition. Additionally, the repayment conditions are much harsher than the Swedish ones, I believe. These two are not close to even.

Tuition is free at the best schools now if your parents make less than $60,000 a year, but you have to have very good grades to get in. If you go to your state college tuition is very low too. States have a lot of autonomy in the US so going to even a neighboring state to go to school means you'll pay much much more in tuition. There's a big debate about giving illegal aliens the reduced tuition rate, some states do and some don't.

[McFuu]

From what Xar226 posted earlier in this thread, living expenses are not automatically included in US tuition fees, but are additional costs.

So assuming the system in Sweden is similar to Norway, a Swedish student pays nothing for tuition and a sum for living expenses. An American student pays a similar or slightly lower amount for living expenses and a far larger one for for tuition. Additionally, the repayment conditions are much harsher than the Swedish ones, I believe. These two are not close to even.

Fed student loans have extremely lenient repay conditions. They can be furloughed if you don't have a job, if you can't make full payments they will take a lower payment amount. Calling your lender (95% its a federal loan for students) will do wonders, many people just don't.

Big problem in America is everyone wants to go to xyz school, usually out of state. If they stayed near home and went to a nearby school that offers the same program they would save a metric ton of money. These $30k a year schools are out of state, stay on campus, etc... Staying local will give you a 1/3rd of that tuition rate. If you go to Community college for 2 years, than transfer to the larger university, you will save even more. And your education will be identical, as will your diploma to a person who went to that school the full 4 years.

Many community colleges have programs that you take actual classes from a major university with the major university teacher, only hosted at the CC, and makes it extremely easy to transfer into that college later on. A CC near me works with both NJIT and Monmouth U, in a similar fashion. Both schools are highly regarded, Monmouth being borderline Ivy League. Yet you can get classes through the CC for the low cost of community college prices.

I'm not saying they are 100% comparable. But it seems from what I've learned from this thread, they are close, especially when attempting to save money.

[Dezerte]

The repayment conditions of these loans are rather lax compared to the US. I'm sure there are other factors at play as well.

[Aggrophobic]

I know we have some Swedish forum members and I'm wondering if they think this is true. The Atlantic is an old left leaning US magazine.

More at the link

http://www.theatlantic.com/internati...ngle_page=true

Swedish colleges and universities are free.

But students there still end up with a lot of debt. The average at the beginning of 2013 was roughly 124,000 Swedish krona ($19,000). Sure, the average US student was carrying about 30% more, at $24,800.

But remember: Free. College in Sweden is free. That's not even all that common in Europe anymore. While the costs of education are far lower than in the US, over the past two decades sometimes-hefty fees have become a fact of life for many European students. Britain got them in 1998 . Some German states instituted them after a federal ban on student fees was overturned in the courts. In fact, since 1995 more than half of the 25 OECD countries with available data on higher education have overhauled their college tuition policies at public institutions , with many adding or raising fees.

And yet, students in Germany and the UK have far lower debts than in Sweden. And 85% of Swedish students graduate with debt, versus only 50% in the US. Worst of all, new Swedish graduates have the highest debt-to-income ratios of any group of students in the developed world (according to estimates of what they're expected to earn once they get out of school)--somewhere in the neighborhood of 80%. The US, where we're constantly being told that student debt is hitting crisis proportions, the average is more like 60%. Why?


Freedom isn't free

College in Sweden is free. But rent isn't. And food isn't. Neither is the beer that fuels the relatively infrequent, yet legendary, binges in which some Swedes partake. Costs of living in Sweden are high, especially in cities such as Stockholm, which regularly ranks among the world's most expensive places to live. But again, this stuff isn't free for students in other European countries either. So why do Swedish students end up with more debt? It's pretty simple, actually. In Sweden, young people are expected to pay for things themselves instead of sponging off their parents.

Yeap. It's free so you can focus on you studies and not work your ass off to even afford school.
You do need college studies to get anywhere though. The jobs that require anything less are few and far between here.

[Ealyssa]

So the high price of free college has nothing to do with college?

What exactly is the point of this thread?

Asking myself the same question. How is "life is expensive in Sweden when you don't work for a salary" linked to College being free ?

[klogaroth]

Now look at this scenario and add tuition fees to it.

What does that do?

It won't decrease their living costs I'll tell you that. I know this because living costs for English students did not decrease when tuition fees were increased. If anything they rose, because living costs are tied to far more than amount of disposable income available to students. Far, far more.

The cost of food has almost zero care for the disposable income of students.
The private rental market (for anyone not living in halls of residence) has almost zero care for the disposable income of students.
The cost of utilities has almost zero care for the disposable income of students.
You get the idea.

If you introduce tuition you'd either see students from lower income families deciding not to go to university or you would see a big increase in student loans.
If those student loans are anything like those in the UK then many of those debts will never be repaid, and will eventually be written off. For new students in the UK this happens to any loan repayment outstanding 25 years after you first became eligible to pay. Which is when you first started earning a wage over a certain threshold. I don't know the Swedish rules, but by the sounds of it from this thread they aren't too dissimilar.

[Fojos]

Dunno about that. When I was at U.C. Berkeley (1986 - 1989), my tuition for the whole year was $2,000, and rent for a 3-bedroom apartment was $845 which was split between 3 people. Assuming you pay full price, U.C. Berkeley tuition is currently around $13k per semester, and one bedroom apartment is around $2,500? it is actually cheaper to find a 3-bedroom (around $4,000/month) and split it between 3 people. So now college is free, how much more do you think the cost of living going to go up?

And people say Sweden is expensive o.O You can easily find an apartment with one room in Gothenburg that costs 600 usd per month or less, even after the large increase in prices.

[Grim Retailer]

Fed student loans have extremely lenient repay conditions. They can be furloughed if you don't have a job, if you can't make full payments they will take a lower payment amount. Calling your lender (95% its a federal loan for students) will do wonders, many people just don't.

Still assuming the Swedish system is equivalent to Norways, the interest rate is 1,8 %. Interest and downpayments do not start to accrue until you've left uni, and started making more than $ 40 000. You have a reduced rate of interest as long as you make less than 50 000 $ (roughly and a bit simplified). There are also a number of situations that will mean your loan does not accrue interest or need payments such as having a baby, illness, jail time, etc. You can also have parts of your debts, or the whole thing nulled out from disability, work in remote areas, death, or lasting economic problems (that last one is pretty difficult to get through though). Or complete your degree in reasonable time, that knocks a big chunk off your debts.

You debt and the interest on it is also tax deductible.

As far as I understand, US student debts are not even dischargable in bankruptcy.

Big problem in America is everyone wants to go to xyz school, usually out of state. If they stayed near home and went to a nearby school that offers the same program they would save a metric ton of money. These $30k a year schools are out of state, stay on campus, etc... Staying local will give you a 1/3rd of that tuition rate. If you go to Community college for 2 years, than transfer to the larger university, you will save even more. And your education will be identical, as will your diploma to a person who went to that school the full 4 years.

And in the Nordics, you can go out of state and pay nothing, or stay at home and pay nothing. I am sorry but I don't see how "Its less bad if you stay local" means its better.

Many community colleges have programs that you take actual classes from a major university with the major university teacher, only hosted at the CC, and makes it extremely easy to transfer into that college later on. A CC near me works with both NJIT and Monmouth U, in a similar fashion. Both schools are highly regarded, Monmouth being borderline Ivy League. Yet you can get classes through the CC for the low cost of community college prices.

I'm not saying they are 100% comparable. But it seems from what I've learned from this thread, they are close, especially when attempting to save money.

You can live at home in the Nordics too, and pay nothing. Or do half the courseload and work while studying. I think what you are basically saying is that an American who does everything possible to save money is about as well off as a Swede who makes no special arrangements to save money and goes to Uni where he likes.

Everything I've heard from Americans about current student debts indicates that they are far worse off.

[Thepersona]

what is the point of this thread? trying to bash free or low cost tuition with high costs of living that are unrelated to said tuition?
well, i'll make an example: in my country (chile) we have a government-backed loan (it means that if u can't pay said loan after 10-15 years, the government pays the rest) it has a 2% anual interest rate (it went down from 6% on 2011). college here cost between 8000-12000 USD but the minimum wage for a full time working is about 600 USD/month. the loan covers about 80% of the tuition (and here we're fighting for a free uni)

[Grimbold21]

Dunno what the issue is.

The scandinavian countries, unlike a great deal of European countries (Portugal anyway), have "free" education, in the sense that while you're not required to pay tuition, that cost is probably offset by taxes.

Over here you pay over 1k € in tuition a year and you still need to deal with every other cost, which is why im going to Denmark for my masters. I was considering Sweden, but the Danes have that system in place where if you work, the government will give you financial aid.

[xChurch]

Funny how the thread started trying to argue that Sweden's "free" college was a bad thing but after a few people from there (or close to there) explained how it actually is, it sounds a lot better than what most people get when they go to college.

[Logwyn]

Big tax deductions on home mortgages in the US.

And if you pay a 13th payment to principle you cut the mortgage down to 15 years. Can't make the extra payment.. You bought too much house.

[Witchblade77]

The loan is to help with the living expenses. Nothing to do with tuition. The interest rate is so cheap, that not taking it is silly.

To a certain extent is the same with buying a house in the U.S. Even if you can pay cash, the interest rate is so cheap now, you are better off getting a loan from a bank.

ok... please explain to me how having ANY interest rate is better than having NO interest rate (which is what you get with paying cash)

edited to add, on tax deductions, maybe it depends on a size of the mortgage or location or whatnot, but... as a homeowner with a mortgage? our itemized tax deduction was like $30 less than our standard. so yeah.. still not seeing how its worth taking out a loan over paying cash

[Logwyn]

If you find anything in the 400-500 range, lemme know. I kinda need one!

What city?

[rayden54]

That's a 100% personal choice expenditure and in no way should count towards actual wracked up debt. That's like saying people should include their clothing, luxuries, vehicle, gas, maintenance, etc. in their debt accrued amount before saying, 'Yep, that's my final price I owe!"

If it's paid for with borrowed money, then it's debt.

[dextersmith]

I feel being accountable for your own fees makes you take things more seriously. Fail and you'll pay more and pay for naught.

[Rasulis]

Umm no lol. Evidently youve never bought a house. At 3.5% interest on a 30 year fix isn't just 3.5% overall. It's annually. So for a $300,000 home you'd wind up paying over $200,000 in interest over 30 years. So how exactly is that better if you have the capability of paying cash? Sounds like a terrible financial opinion.

Assuming 20% down payment, the going rate for 30-yr fix is between 3.4 – 3.5%, and 15-yr fix is 2.6 – 2.7%. On a 300,000 loan, one would pay app. 178,000 and 60,000 over the life of the loan for 30- and 15-year fix, respectively. It is not hard to find balanced fund that averages 5.9 to 6.1% annual return over the last 10 years. My CA Tax Free Bond return 3.46% as of 05/13, with 6.3% average last year, and 5.11% the last ten years. If Mutual Funds are not your cup of tea, you can leverage the cash buy rental properties. Although, at the moment, it is probably not the best time. At least not for a casual investor.

Another benefit is the tax deduction. The basic strategy for most middle class couple in 2016 (both working) is to get their taxable income down to 75,300 where your tax rate went down from 25% to 15%. So you want your house payment to be big enough so that after maxing your 401k (45,000 for married couple over 50), IRA and HSA, your taxable income is less than 75,300. Don't forget property tax is also deductible. Done right, a married couple making 150k can end up paying less than 12k in federal income tax.

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ok... please explain to me how having ANY interest rate is better than having NO interest rate (which is what you get with paying cash)

edited to add, on tax deductions, maybe it depends on a size of the mortgage or location or whatnot, but... as a homeowner with a mortgage? our itemized tax deduction was like $30 less than our standard. so yeah.. still not seeing how its worth taking out a loan over paying cash

Read above. You are not doing it right.