SHOW ME THE MONEY! Sweden’s social welfare system and families

When people talk about Sweden’s social welfare system, they often talk in terms of quantifiable statistics: the distribution of fathers and mothers on parental leave, infant mortality rates, and the number of entrepreneurs per capita, to name a few. It’s more difficult to trace the social welfare system’s effects on Swedish culture and families—effects that are just as important, but to which it is almost impossible to assign numbers and figures.

When I first came to Sweden, one of the most startling differences I saw between here and anywhere else I’ve lived—multiple regions in the United States, Italy, Austria—is the way that parents and children interact with each other as a family. It took me a while to understand why these differences exist, but I think they originate in large part with the far greater independence that young adults enjoy at an earlier age in Sweden than in most other parts of the world.

The biggest difference for me as a young adult and an American is that from what I’ve seen, the large majority of Swedish 20-somethings are completely financially independent from their parents. In the United States, young adults frequently have their finances interwoven with their parents’ to a much greater degree through, for example,  student loans, health insurance plans, and family cell phone contracts.

My Swedish family! (almost everyone)

It’s impossible to generalize about the behavior of parents and children in the United States versus in Sweden without stereotyping. It seems to me, however, that the safety net and the opportunities provided by the social welfare system makes a profound difference on how (in)dependent young adults are on their parents. Because young adults in Sweden have such a greater degree of economic freedom than in other parts of the world, a greater degree of self-agency at a younger age comes hand-in-hand.

Swedish parents seem just as willing as any others to help their kids out with money if they need to make a down payment on an apartment or buy a car, but barring large expenditures, young adults in Sweden don’t need their parents to underwrite the costs of their everyday lives. Because of this, the relationship seems to move beyond parenting into a more adult friendship mode at an earlier age than in other countries.

One giant difference is the cost of higher education. In the United States, parents often start saving for their child’s college tuition before the child is even born. In Sweden, it’s free to go to university, and full-time students get a monthly subsidy from the state to support them during their studies. They can also apply for a loan from the same governmental agency with lower interest rates than competing banks.

It’s also common for Swedes to take time off from studying for a couple of years after finishing gymnasium (something between high school and the first two years of college) and work or travel. This is the time when they’re expected to become adults, and once they’ve gotten a clearer idea of what they want to do, they’ll start studying at a university. Until their studies start, though, Swedes are relatively free to try things out, to travel, and to seek out life experiences rather than move quickly towards economic security.

There may be some Swedish families that are affected by the social welfare system less than others. Both photos CC from Flickr, esther1616 (l) and hellojenuine (r).

The strength of the health care system in Sweden also allows young adults to have incredible economic freedom from an early age. Having access to high quality, efficient health care that also happens to be provided at a low cost to the patient gives everyone in Sweden the luxury of not worrying. For young adults in the United States, the difference is even greater. Before you get the fancy full-time job with benefits included, your health insurance comes from your parents’ job and their willingness to include you as a dependent.

All this security comes at a cost, of course, and that’s where Sweden’s high tax rates come into play. Sweden’s social welfare system is a safety net sustained by the strong economy and the tax-paying population, and you’ll see a hefty chunk of your paycheck allocated to the system before it makes its way into your pocket. The tradeoff is that your contribution lets parents off the hook for taking care of their adult children and puts it on the government instead. In the end, I’ve got to say—they don’t do a half bad job. And then parents can just enjoy being parents.

 

  • Monica-USA

    This is really interesting thank you.

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  • Pingback: 1 Year in Sweden, 30 Swedish Experiences… and 30 more to work on | The expat blog — blogs.sweden.se

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  • Mgsulkis

    thank you for the article. I’m a 20-something ex-pat american working in europe traveling to stockholm for the first time. found your article and enjoyed. all of what you said proves true in my case, at 25 still on my mothers (a nurse!) healthcare rather than paying into my employers rather less palatable one.

  • rocknolla

    This isn’t very unique for Sweden as every country within the EU has both free health care and university education, as well as other various social benefits more or less. It generally differs much more between the EU countries and the US as a whole, than between Sweden and rest of EU or any other western country for that matter, regarding this issue I think. As for the monthly subsidy from the state to support the studies, it’s very low and in order to support yourself during college it’s necessary to take loans as well. The interest is based on how much loan you take and not on the income. This means that you’re obliged to pay back the same amount of loan + interest, no matter what the income on your first job will be after the studies are done. This has caused lots of troubles for students who haven’t found a job quickly enough afterwards. In turn it has made students to be very cautious with loans and nowadays it’s not uncommon for students to help/completely finance their studies by having part/full time jobs or save up some money before they begin their studies. Some students with wealthy relatives or parents even set up loan deals as well to get around or by buying them a condo during their studies, on which they can make a profit when the studies are done. Many students also lower their expenditures by living with their parents the first years at university, if possible.
    This is taken from my own experiences as a student for many years and comes from what I’ve seen and heard. So in reality, things are quite far from as simple and general as you try to state.

    • http://www.transatlanticsketches.com Kate Reuterswärd

      It’s true that the Swedish government offers both subsidies and loans that have to be paid back, and with the high cost of living in Sweden, lots of students do take the loans. However, the contrast with the US is pretty incredible. We pay hundreds of thousands of dollars for our education – and we have the same situation when we graduate.

      In my opinion, having lived in both places, while there is no such thing as a free ride, people in Sweden have far fewer financial burdens related to education than Americans (my primary point of reference). I’m not saying no one ever has to get a job or take a loan, but it’s far more manageable than what we’re used to dealing with here.

      Thanks so much for writing in – I appreciate your point of view!

      • rocknolla

        More managable for who or the actual costs? .. I’m not sure what you’re referring to here.

        First of all, it’s not due to the high living costs the students have to take loans, it’s due to the fact that the subsidy part is VERY low, merely 2000 kr. No student will be able to pay rent, buy food and text books for that small amount. Compared to the US, I hardly think it would be possible there either. Either you take loans or/and work or save money before you begin your studies. Also, like I said before, you have to think twice before you even decide how much (or not) loans you want to take because the day comes when you have to pay it all back and the interest is NOT based on the *actual income* here, but rather on *how much* you the loan is. So just make sure you have a well paid job or a job at all secured, after your studies are done before you even begin, unless you want to risk getting a remark at the tax agency, which in turn may lead to some harsh consequences; like problems with getting a housing contract or even job, as many companies do background checks before hiring. Those remarks will stay registered for 3 years. In addition to this, you have to take at least 70% of the college credits annually in order to continue to recieve loans and subsidies, unless you want to live on the streets for a whole semester or have double workload. The student loan agency makes no exceptions here, I can testify as I’ve been there myself.

        Yes, I know people pay awful amounts of money for college fees in the US but on the other hand they don’t pay as high taxes as people in Sweden do, taxes of which a big part goes to the “free” education system. People in the US can also choose if they want to pay or not, people in Sweden can’t and still have to contribute to the higher education costs per potential student.

        As far as I know, most of the students’ parents in the US also save up for their college education, which means that the students themselves have much less to worry about than here. The costs for the dorm and food for instance, is often included in the college fees in the US, which is most probably paid by their parents. Concerning the loan conditions in terms of interest rates in the US I’ve no idea how it works there, but I’ve never heard of anyone that has to pass annual college credits limits in order to be able to continue to recieve loans. Therefore I wouldn’t say it’s more managable to study in Sweden if you take the things I brought up above in consideration, especially from the students’ point of view and their conditions as well as what consequences it may lead to.

      • rocknolla

        More managable for who or the actual costs? .. I’m not sure to what you’re referring to here.

        First of all, it’s not due to the high living costs the students have to take loans, it’s due to the fact that the subsidy part is VERY low, merely 2000 kr. No student will be able to pay rent, buy food and text books for that small amount. Compared to the US, I hardly think it would be possible there either. Either you take loans or/and work or save money before you begin your studies. Also, like I said before, you have to think twice before you even decide how much (or not) loans you want to take because the day comes when you have to pay it all back and the interest is NOT based on the *actual income* here, but rather on *how much* you the loan is. So just make sure you have a well paid job or a job at all secured, after your studies are done before you even begin, unless you want to risk getting a remark at the tax agency, which in turn may lead to some harsh consequences; like problems with getting a housing contract or even job, as many companies do background checks before hiring. Those remarks will stay registered for 3 years. In addition to this, you have to take at least 70% of the college credits annually in order to continue to recieve loans and subsidies, unless you want to live on the streets for a whole semester or have double workload. The student loan agency makes no exceptions here, I can testify as I’ve been there myself.

        Yes, I know people pay awful amounts of money for college fees in the US but on the other hand they don’t pay as high taxes as people in Sweden do, taxes of which a big part goes to the “free” education system. People in the US can also choose if they want to pay or not, people in Sweden can’t and still have to contribute to the higher education costs per potential student.

        As far as I know, most of the students’ parents in the US also save up for their college education, which means that the students themselves have much less to worry about than here. The costs for the dorm and food for instance, is often included in the college fees in the US, which is most probably paid by their parents. Concerning the loan conditions in terms of interest rates in the US I’ve no idea how it works there, but I’ve never heard of anyone that has to pass annual college credits limits in order to be able to continue to recieve loans. Therefore I wouldn’t say it’s more managable to study in Sweden if you take the things I brought up above in consideration, especially from the students’ point of view and their conditions as well as what consequences it may lead to.

        • Bbashia

          “Most” of the student’s parents do not save up for their children’s education here in the U.S. because most people in the U.S. do not make enough money to be saving for anything. I have never heard of the cost of dorm and food included in fees. That may happen at a select few colleges, but it’s not common. Also, we’re talking about 65,000 loans that the kids are coming out of college with. I participated in a student protest where students were saying they got out of college with $400 monthly loan payments, and could only find jobs for $1400/month and often they’re the lucky ones because it’s a so-called recession here with a !7% real rate of unemployment. (They only report unemployment here based on number of people still drawing unemployment checks. If you haven’t found a job when you’re unemployment runs out, which is common in this “recession” then you’re no longer counted as unemployed.) Keep in mind that housing at least here in Minneapolis is a minimum $700/month and food $320/month–minimum. Basic landline phone is $24/month and electric at least $20/month. Heaven forbid you should stop out with friends for a coffee. Sure, you could share an apartment with a friend, but get used to it because it will take you at least 13 years to pay off that loan. Based on your comments, you haven’t much experience with what is going on here in the U.S today. It used to be true that we could get grants and very low interest loans, but not anymore. While jobs are getting more technical and there’s more need for some kind of education beyone high school, fewer students can afford advanced education or training. The bankers and Wall Street are sucking us dry.

      • New Yorker in Malmö

        Hi Kate,
        Thanks for your article. I liked seeing your Swedish family and the happy baby in the photograph. Thanks for being brave, too, to weather the comments from the readers.

        I am an American living in the Malmo area. My wife is a Swede and age 47, she still has hundreds of thousands of Kronor to pay the government for the loans she took as a much younger 20-something to buy her independence from her parents, to get away from living at home. That was a long time ago. The university was paid by the government but the loans are still a big drag on her pay. She really borrowed too much, in hindsight, taking too many years in the university system to complete her degree, not really interested in going to the working world so soon.

        She may only finish paying her loans when she retires, there is just so much left to pay. She has colleagues who finished paying their loans well into their 50′s and 60′s. The interest rates are very low for the loans she has, so it may be to her advantage to pay them back one small payment at a time. She has children and was divorced, so the burden of the loans was compounded by the events in her life. So the loans used to buy the independence many young Swedes seek as soon as they are 18 and hopefully admitted to their first choice of universities.

        My wife wishes she had finished her studies earlier and not borrowed so much from the government. I guess in those days 25 years ago, the Swedish system was more relaxed. Nowadays I just wonder how this economy can absorb all the people immigrating here and paying the university graduates enough money so they can pay back those loans AND afford the high rental costs or mortgage payments they will need to make.

        Imagine having to pay 3 million Kronor to have a reasonable apartment or house in Lund/Malmo. That is 500,000 USD. You could have a wonderful home in most places in the USA for that amount. I do not see how most people could ever pay back that loan when they earn 30,000 kronor per month. You have to double up and get married and hope that marriage lasts before you commit to such high prices to own a place to live.

        We both came to Sweden and found love here. It is a beautiful place in that regard.

        I wonder how long this social welfare system will last given the state of the economy worldwide and the need to increase wages so that people can afford to live in the major employment centers like Malmo/Lund. Wages clearly must rise to meet the rising living costs.

        I am fortunate enough to have paid back my student loans for 2 masters degrees and undergraduate years in my 30′s because I was so nervous about holding on to them. I definitely agree with the people who have commented that it is so difficult to afford to live as a student nowadays and then to have to face paying back all the loans needed to get through the university years.

        Thanks again for the great article. Best wishes to you and your family for 2013.

  • rocknolla

    “It’s also common for Swedes to take time off from studying for a couple of years after finishing gymnasium (something between high school and the first two years of college) and work or travel. This is the time when they’re expected to become adults, and once they’ve gotten a clearer idea of what they want to do, they’ll start studying at a university. Until their studies start, though, Swedes are relatively free to try things out, to travel, and to seek out life experiences rather than move quickly towards economic security.”

    Well, you should also keep in mind that as before 2010 Sweden had mandatory military service for all men from 18 years of age as well as most kids begin first grade when they’re 7. That means I began my college studies first when I was 20 due to I was in the army for one year and began school when I was 7, as opposed to most of the American kids who may attend college right after high school when they’re 17-18 as most kids there begin first grade when they’re 6 years old and nobody is enlisted for military service. So the later start at college in Sweden is partly affected by these factors. On the other hand it only takes 3 years of full time studies to accomplish a bachelor degree in Sweden as opposed to 4 years in the US due to a different pace in the gymnasium, which is the Swedish equivalent to high school in US.

  • daphnebascos

    Lots of students in Sweden do take the loans. Nice post you have here. Thanks for sharing.

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