On Thursday, 14 May, the Saeima adopted urgent amendments to the Law on Higher Education Institutions establishing an institutional funding model for all state higher education institutions and colleges.
The aim of the changes is to improve the higher education funding system by developing a three-pillar model and strengthening its alignment with the needs of the national economy. The new model modernises funding principles, aligning them with best practices in Nordic countries, and promotes the quality and accessibility of higher education, and more efficient use of resources.
Until now, the funding system has largely been based on filling state budget quotas. This creates insufficient incentives to improve the quality of studies and does not always ensure high graduation rates or the training of specialists needed by the economy. The changes envisage a transition to a results-based approach, placing greater emphasis on the number and quality of graduates rather than the number of students admitted.
Institutional funding will provide higher education institutions greater freedom to choose the most effective solutions themselves to achieve the set results.
A significant change is the delegation of authority to the higher education institutions themselves to determine the number of study places. This will allow higher education institution councils to plan admissions more flexibly and strategically, focusing resources on students with a higher potential to complete their studies and reducing dropout rates.
At the same time, the approach to cooperation between the state and higher education institutions has been revised. Instead of setting a budgeted number of student places, the Ministry of Education and Science, together with sectoral ministries, will conclude agreements with higher education institutions regarding the number of specialists to be trained. Special emphasis will be placed on sectors critical to the national economy, including education, healthcare, and STEM, with a focus on qualified graduates. The procedure for determining the number of specialists to be trained will be established by the Cabinet of Ministers.
Until now, study places were divided into state-funded and fee-paying study places. Going forward, it is stipulated that study places will be either fully or partially funded from the higher education institution’s resources, or funded by private individuals.
Several significant reforms have already been implemented in the higher education sector, including improvements to the internal governance of higher education institutions, enhancements to research funding, the introduction of a new doctoral programme model, and the transition to institutional accreditation of higher education institutions. Institutional funding is the next step in the sector’s development.
The new approach has already been tested in a pilot project launched in late 2024 involving a portion of the country’s higher education institutions. Its results demonstrate progress in attracting external funding, strengthening the strategic specialisation of higher education institutions, and training young researchers, while noting that the full impact will be assessed in the long term.
The Saeima also adopted related amendments to the Education Law and the Vocational Education Law. The new institutional funding model will be introduced in 2027.
Saeima Press Service