The total amount of funding to be granted to the higher education institutions by the Ministry of Education and Research is determined annually by the Norwegian Parliament (Stortinget) as part of the national budget.
The current model of funding for higher education institutions was introduced in 2002 as part of and to support the aims of the Quality Reform of Norwegian higher education. These aims were, amongst others, increased quality and better student progression in higher education. The model also sought to facilitate flexibility in the sense that the institutions could more easily alter their range of study programs to both caters to student demands and the need of the labor market for skilled professionals. The institutions' degree of autonomy also increased. The older model was to a larger extent based on regulatory governance from the Ministry and funding based on the level of activity, e.g. the number of students. In the new model, on the other hand, funding was to a larger degree based on results. After 2002 the funding scheme has been adjusted several times, at the latest in 2017, but the basic structure and logic remain the same.
The Ministry allocates an annual block grant to each higher education institution. The board of the institution is responsible for making priorities within the confines of the block grant to fulfill the aspirations and strategies of the institution as well as nationally defined aims of the higher education sector as a whole. In this way, the funding model provides each institution with a considerable degree of autonomy by ceding most decisions of activity and areas of priority to the institutions themselves. The autonomy is restricted by some earmarked allocations within the block grant and expectations of the education output. The Ministry of Education and Research defines the minimum annual number of graduates from each institution for some study programs for health professionals and within teacher education.
The same model of funding applies to both public and private higher education institutions, although the public institutions receive a substantially larger block grant than the private ones. As of 2020, the funding will be distributed to 21 public institutions (all public institutions in Norway) and 15 of all the private institutions (not all private institutions receive public funding). Public institutions make up the largest part of the higher education sector, and receive 95 % of the public funding.
The size of the block grant for each institution depends on a long history of specific priorities made over time by the parliament and the government, adding up to the institutions’ current block grant.
Some changes in the block grants are decided by the ministry or the Storting on an annual basis. The main types of allocations in the last decade have been increases in funding to expand education and research capacity. When funding is increased to expand education capacity, the ministry defines the expected increase in output. Such requirements may be specified at the institution level, for subject areas or specific study programs. The ministry does not define thematic priorities for research within the block grant. Most of the funding for research within the block grants has been earmarked for Ph.D. positions and positions for postdoctoral researchers. Research capacity is indirectly affected also by the allocations to education.
The block grant is also affected by annual performance-based funding changes. These are calculated based on the institutions’ recent changes in output on eight indicators. The performance-based change in funding for the year Y is determined by the change in output between year Y−3 and Y−2 multiplied with a pre-determined amount.
The performance-based funding for four of the indicators are based on the changes in output in absolute terms:
- Study credit points
- Number of graduates
- Number of exchange students, both to and from abroad
- Number of PhD-graduates
For four of the indicators, the funding is based on the institution’s share of the total output change. These indicators therefore only affect the distribution of the funding between the institutions, and not the total funding volume:
- Publication points (scientific publications adjusted for publication type (article/chapter in anthology/monograph) the number of authors and journal prestige (two levels))
- Funding from the European Commission
- Funding from the Research Council of Norway
- Public and private revenue (such as education and R&D funds from municipalities, businesses and private investors, etc.)
For some institutions (the public schools of art, music, and architecture and most of the private institutions) only some indicators are used. This is mainly due to the lower relevance of the more research-based indicators for these institutions.
Financial autonomy and control
Higher education institutions receive a total block grant and are free to decide how to allocate between types of cost. Public higher education institutions can earn complimentary funds from contract research, grants from research councils, international research grants, sale of publications, etc - provided the relevant national regulations for the sector are adhered to.
Public higher education institutions can transfer grants from one year to the next. They can receive gifts from individuals or foundations but are not allowed to borrow money to invest in buildings, laboratories, or similar.
Construction projects at universities and university colleges may be funded in several different ways. The main models are is user-funded construction projects and ordinary construction projects. User-funded construction projects are projects where the institution undertakes to meet the rent for the building(s) from its own unchanged budget. This form of funding is available to central government institutions that pay rent to Statsbygg (the Norwegian government's key advisor in construction and property affairs). Ordinary construction projects follow the governmental model for major investment projects. Proposed initial appropriations and cost ceilings for these projects are presented in the national budget.
Fees within public higher education
Norwegian public higher education institutions do not have tuition fees either for national or foreign students for ordinary study programs. They may charge tuition fees for non-degree courses, courses without study credit points, and a few Master's programs (experience-based programs). A modest semester fee is charged to all students and funds the local Student Welfare Organization.
Financial support for learners' families
There are no specific financial support mechanisms for learners' families in addition to those on the students themselves.
Financial support for learners
Support and eligibility
Norwegian students are entitled to loans and grants from the State Educational Loan Fund (NSELF). Students who have been accepted by a university, university college, or other post-secondary education and fulfill certain basic criteria, have a right to educational support. The support is reduced for part-time education. The basic support is meant to cover living costs and study material (books etc.). The amounts are universal for all students who are eligible for financial support. Students can apply for an additional loan to cover tuition fees. A student may receive loans and grants for up to a total of eight years. Students may have a one-year delay in completing the education without losing their right to support.
Basic support is initially given as a loan, however, 40% of the loan may be converted to a grant for students who do not live at home with their parents. To receive the maximum grant, students have to pass all their examinations and not have income or assets exceeding certain limits.
There are additional loans available for students who are 30 years or older and for students with children.
There are additional grants for students who are on maternity leave, students with children, students who become ill, and students with a disability. The size of the grant depends on the income of the student and the income of the spouse or cohabitant.
Financial support is also given for study abroad for Norwegian citizens and certain foreign citizens (citizen of an EEA or EFTA country who has accrued rights in Norway and foreign citizens with a permanent right of residence). Degree students abroad must study full-time, to be eligible for financial support. Norwegian students abroad can in addition to basic support receive tuition support and support for travel expenses. Both tuition support and support for travel expenses are paid partly as grants and partly as loans.
Students must repay their loans when they complete their education or when they are no longer entitled to receive support. The repayment period is normally 20 years. The first payment is normally made about seven months after graduation.
No interest is calculated or paid during the years of study. Interest is calculated only from the first day of the month following graduation. Interest is also calculated if the student interrupts his/her education or if the student is no longer entitled to financial support. The interest rate for loans is set by the Government but is normally close to the interest rate on the private market.
The State Educational Loan Fund has schemes and arrangements for loan remission and postponement of payment of interest rates. Any borrower may postpone repayments for a period of a maximum of 36 months during the entire repayment period. Interest will, however, as the main rule, be calculated during the period of deferred payment. To be granted relief from paying interest, the borrower must be in a certain situation that entitles him/her to this, amongst which are low income, unemployment, illness, childbirth, or care of small children. Also, the borrower's total income needs to be below certain limits. A borrower who is entitled to interest exemption may also be granted deferred payment for more than 36 months.
In some cases, all or part of the student's loan may be canceled. This applies if the graduate lives and works in certain parts of Northern Norway and for some kinds of teacher education. All, or part of the loan, may also be canceled if illness prevents the graduate from working (it is a requirement that you receive a disability pension from the National Insurance Scheme). Debt is also canceled in case of death. Foreign students from developing countries under the quota system are not expected to pay back their student loans if they return to their country of origin after studies in Norway.
Private institutions may charge fees from students for all types of higher education even when receiving state funding, but the fees must be used for the benefit of the students.