State financing of education aims at creating equal learning opportunities for studying to all capable and motivated students and to ensure financial resources necessary for the educational institution.
In the academic year 2021/22, there were 18 educational institutions in Estonia providing study based on higher education curricula. Five of these are private schools, six state universities and seven state institutions of professional higher education.
Provision of education in universities and professional higher education institutions is funded from the state budget. The higher education institutions are financed from the state budget through activity support intended for covering study costs, administrative costs, investments and assigned operating costs. In addition, the budgets of higher education institutions include resources received from economic activities and domestic and foreign support; universities also profit from the provision of payable services related to their main activity and research and development.
The higher education reform, which entered into force in the autumn of the 2013/14 academic year, created an opportunity for all entrants to acquire free higher education. The decrease of paid study was offset by a 25% increase in funding. The changes in the funding system that accompanied the reform linked the funding of higher education institutions more clearly to the quality and effectiveness of education, taking into account the needs of society. From 2016 onwards, indicator-based (e.g., the number of admitted students and that of full-time students, the quality of provision of instruction, the number of graduates from a university and the number of graduates in broad groups of studies of national importance, specifications for provision of instruction according to curricula and broad groups of studies, etc.) financing is applied to the extent of up to 75 per cent. Financing reform was fully implemented in 2017 after four years of transfer period.
For allocation of activity support to universities, a contract under public law shall be entered into for three years between the university Rector and the Ministry of Education and Research. The contract shall specify the rights and obligations of the parties, liability and procedure for the allocation of activity support. For the performance of the contract under public law, a performance agreement shall be concluded each year as an annex to the contract under public law. The performance agreement sets out basic obligations arising from the mission, objectives and functions of a university and necessities of the state, including the obligations regarding the extent, quality and efficiency of provision of instruction at the level of higher education and the conditions of financing thereof; exceptions to the partial reimbursement of study costs; bases and volume of allocation of student scholarship fund; volume and financing of Doctoral studies; curricula on the basis of which a university is allowed to conduct only part-time study and activities of national importance supporting the provision of instruction at a university.
Performance agreements ensure a better possibility for specifying the areas of activity arising from the functions of the higher education institutions, enable to decrease the unreasonable duplication through the effect of financing indicators and support the areas of development of national importance. In addition, other criteria characteristic of competitive higher education can be taken into consideration – to assess the internationalisation of universities, support services for students, cooperation with business sector and development of common curricula and to allocate funds on the basis thereof.
Higher education institutions are, to a small extent, financed from the budgets of local governments. Higher education schools may accept donations, scholarships, etc. as well as financing from third persons (entrepreneurs, graduates, etc.).
Financial Autonomy and Control
Upon implementing the activity support system, the notion of state-commissioned education in higher education and the complicated mechanism of coefficients and base costs forming the basis of the former were dropped. Financing was no longer linked to quality accreditation conditions. Since 2012, quality assessment has been based on the system which gives the right to provide instruction to only those institutions that have positively passed the assessment of groups of curricula.
Performance agreements ensure the financial autonomy of universities and higher education institutions understand the preparation of budgets. Educational institutions have extensive autonomy in managing their funds, staff, land and buildings.
The head of a higher education institution has the primary responsibility for finances. Supervision is exercised pursuant to the procedure established at the state level. According to the Accounting Act, supervision is exercised by audit companies and the National Audit Office of Estonia is the supreme body supervising the use of public money.
Fees within Public Higher Education
Studying at all universities in public law and state institutions of professional higher education in private law is free of charge for students who study full-time following a curriculum (the curriculum is cumulatively completed in the amount of at least 75%), the language of instruction of which is Estonian and who has by the starting semester cumulatively completed the study load subject to completion under the curriculum in the previous semesters (30 European Credit Transfer and Accumulation System credit points in a semester, 60 credit points in a year). Thus, from the second semester, the reimbursement of study costs depends on the volume of completed curriculum. The Government of the Republic of Estonia establishes upper limits to the partial reimbursement of study costs per credit point, on the basis of which a higher education institution establishes the procedure and rates for a specific partial reimbursement of study costs (50 euros per one credit point; with certain curricula, the rate of reimbursement is higher – in the field of study of arts, 100 euros, in medical training, dentistry training and veterinary training, 100 euros, and with aircraft pilot curriculum, 120 euros per credit point).
An educational institution may demand reimbursement of study costs from a student who studies part-time (curriculum is cumulatively completed to the extent of 50-75%) or who follows a curriculum, the language of instruction of which is other than Estonian or who has been deleted from the matriculation register and matriculated again at the same curriculum within two years. A student who has studied within the state-commissioned education and completed at least one half of the standard period of a curriculum can start studies at the same academic level without reimbursement of study costs within a period equal to three times the standard period of the curriculum.
In general, the state does not allocate activity support to private higher education schools. Therefore, students studying in private higher education schools shall pay the tuition by themselves. Private educational institutions are free in establishing the volume of training services.
Financial Support for Learners' Families
Permanent residents of Estonia may deduct training expenses from their taxable income. If a learner him- or herself has no taxable income, the parents of a student of less than 26 years of age can deduct the costs from their taxable income.
Financial Support for Learners
Needs-based study allowance
Need-based allowance is granted to a student who studies full-time and has by the starting semester cumulatively completed at least 75% of the study load subject to completion under the curriculum in the previous semesters or studies full-time in the first semester.
The amount of allowance depends on the student's average income, which is calculated based on the average income of the student and his/her family members, taking into account the taxable income for the calendar year preceding the academic year in which the allowance is applied for. A student on academic leave is not entitled to needs-based allowance.
The upper limit of the student's average income and the amounts of the needs-based allowance are established by the State Budget Act of the year in question.
By the reform of Doctoral studies, which was enforced on the 1st of September 2022, the financing of doctoral studies was changed.
Doctoral students start working as junior researchers under an employment contract at a university or a R&D institution or at an institution outside the university in the field related to their doctoral thesis. Doctoral studies carried out in cooperation with non-university partners are called knowledge transfer doctoral studies. If the Doctoral student does not sign an employment contract to perform research, he/she completes his/her studies alongside other paid job and without the right to receive the Doctoral student support that has been in force until the reform.
Learning mobility funding
Estonia has undertaken to create additional possibilities for supporting the studies abroad of students and individual development of the academic staff of higher education schools. The scholarship programme Kristjan Jaak aims to support the studies of students of Estonian higher education schools enrolled in Master’s or Doctoral study at foreign universities and assignments abroad of students and teaching staff related to study and research. The programme DoRa Pluss supports study mobility of teaching staff, studies and research of Master’s candidates and Doctoral candidates in foreign universities and their participation in professional conferences, seminars or courses abroad.
For study mobility between the Nordic and Baltic countries, it is possible to apply for a scholarship from the Nordplus education program of the Nordic Council of Ministers. Various foreign countries offer scholarships and grants for degree and part-time studies, summer courses (including language courses) and in-service training.
Both students studying at universities in public law and those studying at universities in private law who are enrolled in part- or full-time study and work as teachers and participate in part-time teacher training programmes have the right to obtain a study loan. The students who comply with the requirements can apply for a study loan to the extent that corresponds to the nominal period of studies of the course to the extent of a maximum rate per year. In the academic year 2022/23, study loan is capped at 3000 euros.
Study loan is granted by credit institutions. The government secures the institution granting the loan the interest and the principal amount of the loan in case of insolvency of the recipient. In order to apply for a loan, a student is required to provide a guarantee or find a surety. The interest rate applied to loans cannot extend six months´ Euribor + 3 per cent per year, is capped at 5 per cent per year.
The repayment of a loan commences 18 months after finishing or interruption of studies. Under certain conditions, repayment of a loan is suspended – e.g., for parents of children up to 3 years of age or for the period of obligatory military service. During these periods, the central government shall pay interest payable on the balance outstanding on the amount of the study loan balance of the recipient of the loan.
Need-based study allowance does not cover all costs related to studying, such as expenses on study materials or subsistence expenses. Most of higher education schools offer students dormitory places that are cheaper than rental apartments offered at the real estate market. Library services are also available.
Private Higher Education
In 2020/21, from the 18 higher education institutions, 5 were private schools, one of them a university. Private schools and the students studying at private schools can be funded from the state budget on the same grounds as state higher education institutions and universities in public law. A private school can apply for activity support and if the allocation of activity support is considered of national importance, the expenses of the private school related to the provision of instruction at the level of higher education in the framework of the according curriculum are covered to the extent of the activity support on the basis, conditions and in accordance with the procedure applicable to state professional higher education schools and public universities provided for in the legislation.