Reduced funding for education – a common challenge

The higher education sector in Sweden as a whole is currently facing financial challenges. There are several reasons for this, including increased reimbursements for certain disciplinary domains combined with reduced education funding and the fact that higher education institutions are not reimbursed for cost increases linked to inflation.

“Several factors are all coming together right now that are affecting our situation. The government's increased direct government funding, also called appropriations, for educational programmes in science and technology, through the STEM initiative, means that we get paid more per each full-time equivalent student and annual performance equivalent for many of our programmes. At the same time, the total education budget of the university is decreasing. This means that, with the current volume of education, we are well above our ceiling and are educating more students than we receive funding for. This is something we cannot afford in the long run and therefore we need to make changes," said Ulrika Ekholm, Controller at the Vice-Chancellor's Executive Office.

It is the Swedish Parliament that decides on the allocation of resources for education and research for each higher education institution. For education, reimbursement is based on the number of registered students, which is converted into full-time equivalent students and on the number of completed credits or “annual performance equivalents.” The reimbursement system is based on the classification of courses into different disciplinary domains with different reimbursement amounts. A funding cap specifies the maximum amount of reimbursement that a higher education institution can receive for education provided during a financial year.

Balance between education and research

“The current situation means that we also need to review our costs to ensure long-term sustainable economic development. The annual increase in appropriations from the government does not fully cover the real cost increases linked to inflation, higher salaries, and premises costs,” said Ulrika Ekholm, who continued:

“In a situation where the university no longer needs to educate as many students to reach our funding cap, space is created at the same time to both implement targeted quality investments in education and to make changes and focus on research. Research is central to the university's knowledge development, academic distinctiveness, and societal relevance. At the same time, a stronger balance between education and research helps to promote economic stability through a greater share of external funding.“

Most of the research funding in the latest research bill is distributed via research funding bodies, where higher education institutions are given the opportunity to apply for funding in open competition. Only a small proportion, around 25%, is allocated directly to higher education institutions, mainly to those with full university status. In this context, it remains important to develop our possibilities to compete for external research funding in parallel with reviewing the range of courses and programmes offered, a process that is now underway in all Faculties at the university.

At the meeting on 12 June of the Governing Board of the University of Borås, the distribution of appropriations for education and research to the respective Faculties for the period 2026-2028 was determined.

Summary

• The Swedish Parliament makes decisions about the allocation of resources for education and research for each higher education institution.
• Reimbursement for education is based on the number of registered students, which is converted into a figure representing full-time equivalent students, partly on credits achieved and annual performance equivalents.
• The reimbursement system is based on the classification of courses into different disciplinary domains with different reimbursement amounts.
• The government's STEM initiative provides increased funding for education in science, technology, engineering, and mathematics. This means that the University of Borås will reach our funding cap more quickly and we therefore need to reduce the range of educational programmes we offer.

Concepts

The funding cap (in Swedish, “takbelopp”) is the maximum total reimbursement that each HEI can receive in the framework budget and, together with how education is distributed among different disciplinary domains, sets limits for the number of students at each HEI. Unused funding can be saved and used in future years (appropriations savings).

The economic value of the volume of education is the value represented by the total number of full-time equivalent students and their achievements in different disciplinary domains. If the economic value is higher than the funding cap, the institution can save the excess for future years (overproduction).

The settled funding cap is the final amount that the institution receives in reimbursement from the government. The starting point is the economic value of the volume of education, but the settlement is also affected by whether the HEI has appropriations savings or saved overproduction from previous years.

Read more

The website of the Swedish Higher Education Authority:

Funding of higher education and research - Swedish Higher Education Authority

Manual of concepts - Basic concepts for reporting official statistics in the higher education sector (in Swedish)

Read the letter of appropriation that governs universities and colleges on the website of the Swedish National Financial Management Authority:

Regulatory letter 2025 Authority for universities and colleges (in Swedish)