Main funding principles
The Ministry of Education and Culture makes decisions on the amounts of government transfer for education funded through the system of central government transfers and negotiates performance targets with education providers in terms of funding based on performance agreements. The Ministry also grants central government transfers. Other sources of financing for the institutions include contributions from the students’ municipalities of residence and the maintaining bodies of the institutions, as well as student payments and course fees. Self-motivated adult education is mainly funded through the government transfer system.
The education in Finland, also adult education, is mostly financed by public funding, which means that it is free for the student except for further VET where students must pay moderate fees.
New funding system for vocational education and training
A single coherent funding system was established in the revised Act on the Financing of the Provision of Education and Culture (532/2017) for all vocational education and training. The act includes one uniform funding system for the provision of vocational education and training covering vocational upper secondary education and training, vocational further education and training, apprenticeship training and labour market training leading to qualification.
The funding is divided into calculated core funding, performance funding and effectiveness funding as well as strategy funding. Core funding, based on the number of students, and performance funding, based on the number of completed qualifications and units, would account for 70 per cent and 20 per cent of the imputed total funding, respectively. Effectiveness funding would account for 10 per cent and depend on students’ access to employment, pursuit of further education and feedback from students and the labour market. The new funding system will be gradually introduced and is fully operational in 2022.
The core funding will guarantee that vocational education and training will continue to be provided in all fields and for all students also in future. The funding system will consider the differences in the costs for providing education, such as cost differences between qualifications or sectors, costs for arranging special support, labour policy education, and training for prisoners. The central government funding for vocational education and training is determined annually in the budget instead of the previous system where the funding was based on the actual costs. The new funding system for vocational education and training has come into force in the beginning of 2018. Before 2018, there were slightly different funding systems and unit prices for IVET, CVET, apprenticeship training and labour market training.
Central and local governments participate in funding of adult education
The state participates in the financing of educational services by means of the central government transfers system. Local authorities have a statutory obligation to contribute to funding adult education at general and vocational upper secondary levels. This administrative distribution of financing between central government and local authorities is not visible for the end user, that is the student: both parts of the funding form an entity which is taxpayer´s money. In addition, local authorities are a significant source of funding for liberal adult education. The proportion of central government transfers of the total funding for general upper secondary education for adults is calculated on the basis of the unit price for equivalent youth-level education and the amount is 65 per cent of the government transfer for youth-level education. VET is funded through the Ministry of Education and Culture’s budget. The central and local government provide parts of the funding for vocational upper secondary qualifications while further and specialist vocational qualifications are funded by the central government.The central government transfer to upper secondary vocational education and training accounts for 42 per cent of the calculated expenditure.
There is no statutory municipal contribution for further vocational training (further and specialist qualifications). The percentage share of the central government transfer is 85.6 per cent and students may be charged reasonable fees. The share of the central government transfer is 50 per cent in further vocational training provided as in-service training. The unit prices are based on the average unit price of upper secondary VET.
The state supports liberal adult education
The state covers approximately half of the expenses of liberal adult education institutions. The rest is covered by the students and the owners of the institutions. The state subsidy is determined by the Act on Liberal Adult Education (1998). The Ministry of Education and Culture sets out an annual maximum amount of tuition for institutions, based on which the subsidy is determined. In addition, the Ministry instructs liberal adult education institutions and negotiates with them specific development themes, for which extra funding can be applied.
Study vouchers are used to prevent marginalisation
Liberal adult education institutions may receive special funding from the state in the form of study vouchers for the studies of groups that are at risk for exclusion from education. These groups include immigrants, pensioners, and the unemployed. The institution uses the funding to lower course fees or offer free tuition for those belonging to the target groups.
There is no statutory municipal contribution in funding for liberal adult education. Central government transfers account for 57 per cent of the total funding for adult education centres, folk high schools and summer universities and 57% of the total funding for study centres and 65 per cent for sports institutes. Liberal adult education institutes cover the rest of their costs with education providers' funding and with student fees.
Fees paid by learners
Instruction is provided free of charge for students in certificate-oriented basic education, upper secondary education and training and higher education. Likewise, labour policy training is also free. The state finances the provision of open universities and open universities of applied sciences. Higher education institutions are entitled to charge the students study fees. The fee may be at most EUR 15 per ECT included in the right to study. Fees may also be charged in vocational education and training not leading to qualification, further vocational training, university continuing education and liberal adult education. In addition, certain types of qualifications are subject to specific test fees.
Financial support for adult learners
The Employment Fund grants adult education allowance for employed or self-employed adult students participating in self-motivated education. It is administered by the social partners of the Finnish labour market. Its purpose is to support employees’ vocational studies by granting them financial assistance (adult education allowance) and to support the development of the vocational qualification system by granting scholarships for competence-based qualifications (scholarship for qualified employee).
Adult education allowance
To qualify for the allowance, the applicant must participate in studies leading to a degree, or in vocational further or continuation training organized by a Finnish educational institution under public supervision.
The applicant must live permanently in Finland, and his or her full-time employment relationship with the same employer or pension-insured entrepreneurship must have lasted for at least one year. The employment or entrepreneurship must continue throughout the adult education allowance period.
In addition, the applicant must have been employed or have worked as a self-employed person in Finland or in another EU/EEA country or in Switzerland for at least eight years.
To qualify for the full adult education allowance, the applicant must be on unpaid study leave of at least two months due to his or her studies. During the allowance period, the applicant can earn additional income no more than 250 euros per month.
Allowance can also be paid as adjusted adult education allowance to an applicant whose periods of study leave last less than two months or who studies part-time on the basis of a study leave agreement made with the employer. The absence from work due to studies must last a total of at least 43 days. The adjusted adult education allowance shall be applied for in retrospect each calendar month. The amount of allowance paid will be affected by the income earned during the month. The maximum allowance period is 15 months.
The employees’ adult education allowance is an earnings-related benefit that consists of a basic component and an earnings-related component. Entrepreneurs’ adult education allowance only consists of the basic component of the adult education allowance. The adult education allowance is taxable income. In addition to the adult education allowance, a person may be entitled to a government guarantee for a study loan. The guarantee is granted by Kela (Social Insurance Institution of Finland).
Kela grants the government guarantee for student loans to those receiving adult education allowance. The requirement for receiving the government loan guarantee is for the student to receive adult education allowance for a consecutive period of at least 8 weeks. The Social Insurance Institution receives notification of adult education subsidies granted directly from the Employment Fund. Students’ income or property does not affect their eligibility for a loan, but some benefits may prevent them from being granted the loan guarantee.
Subsidies for private providers
The same criteria apply to private adult education institutions as to their public counterparts in adult education funded by the Ministry of Education and Culture. Companies’ in-service training is generally provided and financed by employers. In addition, there are enterprises providing education and training at market prices for both individuals and companies. These are mostly controlled through consumer protection measures.