The High Price of a Free College Education in Sweden

[Independent voter]

Who would have guessed that students who live independently in cities with high cost of living would enter debt?! Another point ignored by OP is that banks in Sweden will give out long term loans for cost of living expenses (to students with low credit). Another thing which the US doesn't really do, unless a student has good credit to begin with.

Student loans in the US are at low interest rates too. 4% now, I think I got mine at 3%. There are some conditions though, they only let you borrow so much and if you want more, you have to go outside the student loan system and that's more expensive.

At least that's what I remember.

Like the article says, only 50% of US students take out student loans while 85% of Swedish students do.

[Forogil]

Student loans in the US are at low interest rates too. 4% now, I think I got mine at 3%. There are some conditions though, they only let you borrow so much and if you want more, you have to go outside the student loan system and that's more expensive.

Is 4% interest rate low in the US? What is the rate for a normal house-loan?

The student loan rate in Sweden is between +0.06 and +0.6%.

[Independent voter]

Is 4% interest rate low in the US? What is the rate for a normal house-loan?

The student loan rate in Sweden is between +0.06 and +0.6%.

Mortgage rate is around 3.5%

It depends where you go to school too, if you got to Iowa state say, your cost of living will be very low, like $300 a month with room mates. If you go to New York City you could end up paying a $1000 a month in rent and that's with room mates, no food or utilities.

[Theinquisition]

Is 4% interest rate low in the US? What is the rate for a normal house-loan?

The student loan rate in Sweden is between +0.06 and +0.6%.

A home loan in the states is about 4% right now if you go with a 30 year fixed rate mortgage.

That's not that bad for student loans, considering its a unsecured loan.

[Grim Retailer]

The premise of this thread seems to be that rent and living expenses are unique to studying at college, and if you were not at college you would not have anything like that.

Anyway, if Sweden is anything like Norway, everyone who possibly can will get the full student loan and grant. The grant because why say no to money, and the loan because it doesn't start to accrue interest until you leave uni. So you get the loan if you need it, and if you don't need it, you get it anyway, stick it in a high-interest account, pay the loan bact after leaving uni, before the interest starts going, and pocket the interest.

This is what happens when you try to guarantee something to everyone in a free market. It causes inflation until the promise is broken. In Sweden's example, they promised free college education. So what happens?

1. Sweden declares that college is free.
2. College students suddenly have a TREMENDOUS amount of disposable income.

This seems really peculiar. I don't understand how 1. leads to 2. Nothing else that is free increases my disposable income tremendously. Water, air, health care, I don't seem to be provided with free money from any of those. What is more, I've studied in Norway, in the UK back when that was free to natives, and have friends who have done the same in other nations where university was free.

In none of those could you say that students had a lot of disposable income. You could quite firmly say the opposite though.

I find it amusing that the statement were followed by worry about other peoples lack of understanding of economics and markets.

[In Ogres We Trust]

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.

Their education isn't free since it's still paid for via the public treasury.

[Revi]

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.

Busted. This article is sorely lacking research.

[haxartus]

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.

Honestly, it is free for almost all of Europe. I don't consider something like 25 euro a month as "paid college".

[Majestic12]

The reason why people have so high debt is that they:

1. Loan money so that they can live on campus as a "grown up".
This is regardless of the fact that some can live at home rent free - people take the loan and move anyway.

2. Instead of saving what money they can to immediately pay off a huge chunk of the debt, it is wasted on traveling, entertainment, a driver's license or other stuff. Being offered a student loan is the first opportunity for a lot of young people to get some cash and they are never smart about it.

I was in the minority, starting Uni at 19 and lived at home for the full duration. I had friends who spent their loans on pimping up their car or buying other useless things for loaned money. I only knew one other guy who stayed home. Today we're both debt-free, successful, while our old friends are still in debt.

The moral of the story is; be smart about cash when you're young. Opting not to take a loan and staying home if you are able is one of the best financial decisions you can make. Nothing comes for free.

[twelvethirty]

why dont they just get a job?

[Grim Retailer]

why dont they just get a job?

Many do. Like I explained further up, they would be idiots if they did not get the full loan anyway.

[McFuu]

It appears that Student Loan means something different in other countries than it does in America. What student loans in other countries is what we would call an unsecured loan. It's a loan of money without collateral. A student loan in the US is a loan directly applied to the school in which you are going. I would almost say that the collateral on the loan is actually the education you receive at the school. Since schools in America give you room and board and schools in other countries don't, it seems that college education is almost equal.

[Deleted]

Because US students live in cartboard boxes and don't have to pay rent, food etc, obviously. They are some sort of paying machines, you insert them into college and money drops out.

Yes, the prices of living in an expensive city are higher and the prices of food in the EU in general are higher than in the US. But... you can still afford college education.

[S7orm]

1. Tuition fees refer to public institutions but more than two-thirds of students are enrolled in private institutions

This was the line everyone was looking for. If you want to compare only public institutions then you should also add a second graph describing the quality of said schools all over the world. It's useless comparing the cost of public school when you bend the data making the reader think every institution was surveyed while in reality he's comparing the schools with the lowest cost (public) to his idea of education quality (overall university ranking)

This is like shopping at IKEA and telling your friends your fornitures are from a famous European minimalistic crafter.

[Grim Retailer]

Since schools in America give you room and board and schools in other countries don't, it seems that college education is almost equal.

Thats a very peculiar conclusion.

[AlphaOut]

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.

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.

[Independent voter]

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.

Big tax deductions on home mortgages in the US.

[lockedout]

Where does the money go then?

College football.

[Deleted]

CSN is useful, because most of us here around where I live in south-eastern Sweden, since small towns, would have great difficulties finding jobs that work out timing whise with out studies/travel time to educational constitution. So we have SOME cash to live on until studies are finished. Yes, it puts us in debt, but at the same time, it is a fairly low debt concidering we get some more time off and therefor are less worn out during classes, and can study better and learn better as a result.

NOW THIS IS ONLY FOR THE PEOPLE I KNOW IN MY AREA, about... 70 studying people, 71 with myself? But if one DOES manage to keep a half-descent job or even a weekend job around where I live, you can pay off quite a bit of the debt over time, heck you may not even necessarily need to use the loan!

[McFuu]

Thats a very peculiar conclusion.

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.