By reallocating state budget funds, today, 6 July 2021, the government allocated €163 900 to the Ministry of Education and Science to ensure additional funding for access to state-guaranteed tuition-fee and student loans.
Additional funding is necessary in connection with the anticipated increase in demand of approximately 20%, as well as the increase in tuition fees. The University of Latvia (UL), for example, has reported an average tuition-fee increase of 7%, and the UL is the higher education institution where students enter into the greatest number of loan agreements. Consequently, the additional funding proposed by the ministry for the 2021 autumn semester will ensure access to higher education, also taking into account the consequences of the prolonged state of emergency and the pandemic.
In 2020, the ministry introduced a new lending model, abolishing the requirement for a second guarantor, which had often been an obstacle to obtaining a loan. At present, only one guarantee is required, provided by the state development finance institution “Altum” in the form of a portfolio guarantee. Consequently, access to loans is no longer dependent on a student’s family’s financial status or the parents’ ability to provide a guarantee. In addition, the new tuition-fee and student lending model is more advantageous than the lending solution applied in previous years, as it provides that, for every euro guaranteed by the state, the bank issues students at least four euros in loans from its own funds, which primarily enter the education system as tuition fees paid to higher education institutions.
In autumn 2020, demand for state-guaranteed tuition-fee and student loans significantly exceeded trends from previous years and the projected increase. This was driven both by the availability of student loans and by the state of emergency caused by COVID-19 and changes in the labour market, as students’ employment opportunities declined, along with their ability to cover tuition fees and living expenses themselves. The incomes of many students’ parents also declined, reducing their ability to support their children’s studies.
The ministry is currently developing regulations on a scholarship fund for students from large families. However, given that scholarships cannot fully cover tuition fees, state-guaranteed loans are one of the components of a comprehensive solution for access to higher education, including for young people from large families.
Ensuring access to tuition-fee and student loans increases the number of people in Latvia who obtain higher education, thereby promoting the transformation of the national economy towards higher added value. Research shows that people with higher education earn more than the average wage, thereby also ensuring greater tax contributions to the state budget.
The draft order “On the Reallocation of Appropriations from the Budget Section ‘74. Funding to Be Reallocated During the Annual State Budget Execution Process’ of the Programme ‘11.00.00 Demographic Measures’ and the Ministry of Education and Science budget sub-programme ‘03.04.00 Student and Tuition-Fee Lending’” can be viewed on the website of the Cabinet of Ministers.
Author:
Ministry of Education and Science
izm.gov.lv
