Financial resources of state higher education institutions are funds from the basic state budget and income from other sources. Higher education institutions use this income according to the regulations on non-profit organizations. A higher education institution has the right to accept and use donations and grants from banks, other credit organizations, grants and donations from legal entities, as well as individuals. The Senate of the higher education institution determines the structure of the financial resources of the higher education institution but the Audit commission controls the execution of its budget. Once a year the Rector informs the Senate, the Minister of Education and Science and the Minister of the respective field or the founder of the respective institution about the use of the budget.
Higher education institutions founded by the state receives the following funding:
- from the state education budget - basic financing for the optimum number of lists of study programmes and the number of students covering resources to pay for public utilities, taxes, infrastructure maintenance, purchase of equipment and inventory, research and artistic creativity as well as salaries for the staff;
- from tuition fees, paid by the state or received as repayable or free loans which either have to be paid back or need not to be paid back according to the regulations of the Cabinet of Ministers on financing studies;
- from financing intended for use on specific goals.
In 2015 the three-pillar financing model for higher education was introduced in Latvia. It is designed to improve higher education funding system. It comprises:
- base funding for ensuring of study processes,
- performance-based funding, and
- development funding.
In the form of a pilot project, the new model of institutional financing of higher education institutions is introduced at the Riga Technical University (RTU) from January 1, 2024.
The current higher education financing arrangement stimulated higher education institutions to fill state-subsidised study places, which resulted in reduced admission requirements, which in turn contributed to student dropout. The pilot project envisages that the Ministry of Education and Science concludes an agreement with RTU on the training of a certain number of specialists and on other achievable indicators, and will allocate the relevant state funding. RTU will be granted the right to determine the number of study places and financing principles. Thus, the RTU Council will be able to make more rational decisions within the framework of the overall funding.
The biggest challenges in the field of higher education are currently related to the high dropout rate of students and insufficient number of STEM graduates.
Financial autonomy and control
A higher educational institution is autonomous in regard to organizational procedure, implementation of the educational process, internal rules and regulations, hiring and discharge of educational and technical personnel and distribution of allocated funding.
Fees within public higher education
In Latvia higher education may be acquired for state budget resources or for individual payment. The number of places in study programmes subsidized by the state is decided every year at central level by the Ministry of Education and Science. In the last years, in accordance with the demands of labour market and priorities defined in the long-term strategy of economy of Latvia, the number of places subsidized by the state has been increased in areas of natural sciences, mathematics and engineering.
Registration fee is stipulated by all higher education institutions, its amount depends on the institution and it is approx EUR 20 (extra payment may be required if a person submits documents for several programmes).
Tuition fees are charged to students who pass the entrance examinations or regular examinations but fail to be admitted to state-financed places. Institutions are free to set tuition fees for the other places. The size of tuition fees varies quite considerably from one institution or study programme to other. Statistical data on fees and support in public HE is available in the Eurydice publication National Student Fee and Support System.
In accordance with the Regulations on Compulsory Provisions to be Included in the Study Agreement the fee for the programme in total has to be specified in the agreement thus preventing the possible increase of the fee during studies. Payment has to be made to the corresponding higher education institution.
Higher education institutions may implement the so-called rotation principle. Rotation is a possibility to transfer from a tuition fee paid place to a study place financed from the state budget, and is held as annual competition. Usually students with higher marks get the right to study in a state-financed place. Each institution develops its own regulations concerning rotation.
Financial support for learners' families
Tax benefits are awarded to parents (payers of personal income tax) of EUR 213,43 per year to recover the part of the annual funds invested in health care and education of their children.
Financial support for learners
Students are provided financial support in the form of scholarships, grants and loans as well as indirectly by discount of travelling costs in public transport.
Loans may be received by students who study in the institutions offering accredited higher education programmes. These are paid by banks while the state guarantees these loans. The total amount of money devoted for loans is set in the state budget and the bank allocating loans is chosen annually via auction.
There are two kinds of loans - one to cover tuition fees (study loan) and other to cover living expenses (student loan). A study loan may be received by students of private higher education institutions or by students who pay their tuition fees in state institutions irrespective of the study form (full-time, part-time, distance learning). A student loan may be given to all students who study full-time in any higher education institution of Latvia. Every year the list of professions is issued by the Cabinet of Ministers for which the study loan can be covered from the state budget. For every year of employment at a state or municipal institution, the amount of the repayable loan may be reduced by 10% (if such an institution is mentioned in the respective list approved by the Cabinet of Ministers).
If the student has a job, every year he may apply for income tax reduction from a certain sum of income, and get this money back from the state budget. Some exemptions exist regarding registration and/or tuition fees as well as requirements for loans, e.g. orphans (up to 24) do not need to find a warrantor in order to receive a loan, and they receive 100% guarantee by the state.
Dormitories are available close to the chosen higher education institution for students whose actual place of residence is too far to travel.
Students from large families have access to social stipend - amendments (2021) to the Law on Higher Education Institutions offer students from large families the option to receive support – social stipend – paid from the state budget. This is a significant initiative, as for the first time since the restoration of the country's independence, a new scholarship fund based on social criteria is introduced. Previously stipends were paid only based on academic accomplishments. Young people from large families up to the age of 25 will be eligible for a social scholarship - students in public, private universities and colleges in both state-subsidized and study fee-paying study places. The Cabinet of Ministers set student categories that will be eligible for the social stipend, stipend allocation conditions, as well as the size of the stipend based on the student’s academic accomplishments and income, the amendments state.
The rules of registration and accreditation of an institution, licensing, registration and accreditation of study programmes are the same for public and private higher educational institutions. Private institutions may sign agreements with the Ministry of Education and Science, or other ministries or state institutions about training of certain specialists and thus receive funding from state budget.
Full-time students from private (state-accredited) higher education institutions may apply for loans to cover living costs - "student loans". Loans to cover tuition fees are offered also for part-time students in private higher educational institutions.