The High Price of a Free College Education in Sweden

Here's why Swedish college students still graduate with a ton of debt.
stockholm banner39023w.jpg
Beautiful, expensive Stockholm. (Wikimedia Commons)

Swedish colleges and universities are free. Yep. Totally 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.

average-swedish-student-debt-average-us-student-debt_chart-1.png

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.

Meet Ellie

This is Ellie . She's 22 years old and lives in Stockholm, where she studies engineering and media technology at the Royal Institute of Technology. There's no tuition to pay for the five-year course of study. And because she is from Stockholm, Ellie was able to live at home with her parents for the first couple years of her university career.

"My parents told me, 'You are very stupid to move out because every month you save like 4,000 kroner,'" she said.

In a way, she's an outlier. Sweden population of roughly 9.1 million--smaller than Belgium's--is sprinkled pretty evenly over a geographic expanse greater than Germany's. So for many Swedes, living with mom and dad while attending school isn't an option.

But Ellie is also like most Swedish students, in that she's taken student aid from the Centrala Studiestödsnämnden, or CSN , the state-sponsored entity that distributes student aid in the form of grants and loans.

"Everyone takes the grants," she said. "Almost everyone takes the loan as well."

She's right. According to data collected by the OECD, despite nonexistent tuition costs, Sweden has a virtually 100% uptake rate on student aid. That's why Sweden is all by itself in the bottom right corner of this chart, although its Nordic neighbors are not far behind.

Moving out

Swedes, like other Nordic Europeans, have an independent streak. They leave their parental homes earlier than almost all their southern neighbors.

One study found that just 2% of Swedish men lived with their parents after the age of 30. In Spain, a quarter of 30-year-old men still are shacking up with mom and dad; in Italy it was around 32%.

Nobody's exactly sure why this is. One of the more fascinating theories is that the differences in the strength of family ties in northern and southern Europe is a faint echo of invasions by the Roman Empire and Islamic caliphates in the Mediterranean region versus the Germanic-Nordic dominance in regions further north.

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Matt Phillips is a reporter at Quartz, where he writes about finance, markets, and economics.

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