David Haugh
OECD
Axel Purwin
OECD
OECD Economic Surveys: Finland 2025
Abstract
Finland’s future prosperity relies on raising the supply of skilled labour. The higher education attainment rate of 25- to 34-year-olds has stagnated for more than two decades, whereas in many countries it continued to rise. Indeed, the higher education system is of good quality but the number of places has not kept up with demand. As a result, Finland’s attainment rate fell from one of the highest in the OECD in 2000 to 30th in the OECD in 2023. The government has set a target of increasing the attainment rate for 25- to 34-year-olds to as close as possible to 50% by 2030. Reforms to achieve this are underway and the enrolment rate of younger cohorts has recently begun rising. However, although the gap has shrunk, demand for places still exceeds supply and only 43% of 18 to 24 year old first-time applicants to bachelor level education were accepted in 2024. The higher education system is of high quality, 90% publicly funded, and there is widespread public support for it to remain tuition-fee-free for Finns, EU, and EEA citizens. Further raising enrolments requires increasing alternative private sources of funding. It also entails more efficiently matching available places with student needs. As well, continuing education needs ought to be addressed through a wider range of structured micro-credentials such as postgraduate certificates.
In the past decade Finland has seen relatively sluggish productivity growth coupled with growing labour shortages, especially in the green, health and digital sectors. Human capital is a key driver of growth (Égert et al., 2019) and the importance of having a tertiary degree in Finland is illustrated by the relatively high differences in unemployment rates between workers with and without higher education. Indeed 90% of the jobs in Finland where there is a shortage are in high-skilled occupations – one of the highest shares in the OECD (OECD, 2023). The benefits from raising tertiary education levels go beyond aggregate productivity and employment, lifting incomes for individuals and improving health and civic engagement. Highly educated labour is also vital for accelerating the green transition (Chapter 4). Finland’s abundance of affordable clean energy provides a solid foundation for greening industries but realising this potential depends on skilled labour availability, both in industry and in complementary public services.
Although Finland has long boasted high-quality compulsory schooling, reflected in strong performance in international tests such as PISA, PIRLS and TIMSS, this has not translated into an increasing tertiary education attainment rate. While attainment rates in the rest of the OECD have increased, Finland’s higher education attainment rate among the younger age cohort (25-35-year-olds) has stagnated for the past 20 years (Figure 2.1, Panel B). As a result, Finland’s ranking fell from one of the highest in the OECD in 2000 to 30th in 2023 (Figure 2.1, Panel A) and a higher share of Finland’s older population have tertiary education qualifications than younger cohorts. Public funding of higher education increased by only 15% in constant price terms between 2000 and 2020. This was lower than the OECD median (58% over the same period) and Nordic peers, Denmark (33%), Norway (71%) and Sweden (48%). Finland’s public funding of higher education even shrank by 12% in real terms between 2010 and 2020. The slow and eventually negative increase in public funding has constrained the increase in the number of higher education places contributing to a shortage in places across all regions.
Source: OECD, Education at a Glance 2024; Statistics Finland.
The government’s previous target that half of young adults should have a tertiary degree by 2030 has been revised to “as close to 50% as possible” by 2030 as meeting the 50% goal seems increasingly unlikely. In November 2024 the Ministry of Education launched a review of the operating environment and objectives for higher education and research to be completed by mid-2026 (Ministry of Education, 2025). Recently announced government expenditure to boost the number of PhD-students and streamline postgraduate studies is a welcome step to eventually meet the complementary target of allocating 4% of GDP to R&D-expenditure by 2030.
This chapter discusses measures to increase higher education attainment rates in Finland in a context of constrained public finances, without sacrificing the system’s high quality and flexibility. The first section describes the supply constraints in the higher education system that underlie the low attainment rate. The second section outlines two avenues to address these barriers: (i) boosting funding to increase the number of study places; and (ii) enhancing matching of places offered and student and labour market demands. Recommendations include introducing in a limited way tuition fees, incentivising better matching of places and student demand, and expanding micro-credentials education.
This chapter examines trends in demand and supply of higher education institution (HEI) places using the following definitions. Demand for places is proxied by the number of people applying (applicants). The number of accepted places is a good proxy for the supply of places because almost every available place across all regions is taken up. The acceptance rate (places accepted/ applicants) indicates the difficulty of securing a place and the balance between demand and supply. The cohort examined and analysis is restricted to those with a prior upper secondary education in Finland to separate out domestic demand from applications from abroad, which have different drivers that are discussed in Chapter 3.
This data on the demand and supply of places shows that although the gap has shrunk, the demand for places continues to far outstrip supply. The number of 18- to 24-year-old applicants with a prior upper secondary education in Finland has declined in recent years (Figure 2.2). This is consistent with the decline in the 18-to-24-year population cohort between 2015 and 2022 but applications from this group have begun rising again and this is expected to continue through to the early 2030s in line with this population cohort expanding again over this period (Figure 2.3). Importantly, the supply of places for the 18-to-24-year cohort as measured by places accepted rose by around 4 000 or 13% between 2019 and 2024. The supply of places to older students also has an influence on attainment rates as the age of entry to higher education is higher in Finland than the OECD average. The supply of places for applicants to a bachelor’s degree programme in the 25- to 29-year-old age group with a prior upper secondary education in Finland increased by 1206 places or 16.6%, between 2019 and 2024.
A key reason for the lack of places for young high school graduates is that 27.8% of those who accepted a bachelor’s degree place in 2024 were non-first-time applicants. Indeed, although degree award targets for each HEI are set in performance agreements with the Ministry of Education they are not binding, and the number of places is supplier determined. HEIs have high autonomy to determine the number and type of places they offer and admission criteria (OECD, 2023). Internationally comparable data on acceptance rates is limited and highly variable by course but it suggests that Finland’s acceptance rates are low (OECD, 2019c). In Lithuania and Estonia around 60% and 90% respectively of first-time applicants to higher education degrees in engineering, manufacturing and construction are accepted compared to only around 50% in Finland.
Boosting the enrolment of school leavers and young adults aged 18-24 in higher education is key to raising higher education attainment rates. An increase of around EUR 46 million per annum in 2020 to fund 4 248 extra places in 2020 and 5 954 places over 2021 and 2022 appears to have helped boost enrolments as measured by places accepted in Finland’s Education Statistics database Vipunen. Recent reforms, discussed further below, may also have helped to push up entry into higher education by the cohort aged 18 to 24. These included, first, making school education compulsory until age 18, which increases the potential entrant pool. Second, increasing the role of the school matriculation examination in entrance decisions of HEIs has made it easier to apply. Finally, reserving a quota of places for first-time applicants appears to have helped increase acceptance rates for young (i.e., 18- to 24-year-old) first-time applicants. However, the effectiveness of the quota is constrained by HEIs setting a low quota limit due to fears of breaching inequality legislation if the first-entrant quota is set high and non-first entrants cannot obtain a higher education place.
18 to 24 year olds, completed upper secondary education in Finland
Note: 18 to 24 year old first-time applicants to a HEI with a prior education in Finland. Applicants is a count of the number of people applying in an application round. The number of applications is higher than applicants as each applicant can apply in many institutions in each application round. Applicants can only accept one place per application round. Accepted means an applicant accepted a place and the number of acceptances is a good proxy for the supply of places because almost all places available are taken up.
Source: Finland Education Statistics; Statistics Finland; and OECD.
Applications to higher education institutions and places offered, population aged 18-24
Note: Data is used until 2024. From 2025 onwards applicants and places are simulated assuming that the applicant-to-population ratio stays constant at 15%. At the same time, due to ongoing reform effects places offered are assumed to grow at 2.2% per annum, their growth rate in 2024. From 2033 onwards places offered are then held constant. This cohort is aged 18 to 24, first-time applicants to a HEI with a prior education in Finland.
Source: Finland Education Statistics; Statistics Finland; and OECD.
The low overall rate of acceptances (places) to applicants to higher education indicates that supply-side constraints have contributed to Finland’s stagnant attainment rates. As a result of the decline in applications and the rise in places, the acceptance rate for those 18-to-24-year first-time applicants with a prior education in Finland applying to a bachelor’s degree rose from 35.7% in 2019 to 42.7% in 2022 but has plateaued since.
The OECD calculated that meeting the 50% attainment target for those aged 25 to 34 by 2030 would require 10 000 additional study places above the system’s 2020 enrolment capacity for younger age cohorts in the range of 18-29 each year between 2021-2025 (OECD, 2022a). However, there was no contribution towards the target from the 18- to 29-year-old cohort with a Finnish upper secondary education, which accepted 543 fewer places in bachelor’s degree programmes in 2024 than in 2020.
Although it will be too late to meet the 2030 target, population decline would eventually help bring demand for study places more into line with supply. With the caveat that the population projection is very dependent on the migration assumptions, especially for this young and internationally mobile cohort, the cohort aged 18-24 will continue to expand through to 2032, but between 2033 and 2045 it is projected to decline by an average of 1.4% per annum. If the applicant-to-population ratio is held constant at its 2024 level of 18.7%, and places offered to 18 to 24 year olds grow 2.2% per annum as they did in 2024 and are constant from 2033 onwards, the decrease in population from 2032 to 2045 would raise the acceptance rate for this cohort considerably, from 42.7% to 57% (Figure 2.3).
Further increasing places for students aged 18 to 29 will require continuing to work on two main fronts: increasing resourcing for more places through new funding sources; and greater efficiency in the matching of places with student preferences and labour market demands. An over-riding consideration in shifting policy settings to increase enrolments and ultimately attainment rates is to avoid reductions in the quality of the system (OECD, 2023). To this end, the basic rule of minimum matriculation or entry exam results should be maintained and set by the HEIs, as they are best placed to know what is needed as a pre-requisite knowledge to enter a higher education programme.
Currently the supply of places is constrained by the public funding envelope for higher education, which accounts for around 90% of total spending on higher education, one of the highest shares in the OECD (Figure 2.4). Increasing places in higher education will not only be important for raising human capital and reducing skill shortages but also for achieving the government’s objective of raising productivity via higher R&D and innovation. Indeed, these are closely linked objectives. Researchers are mainly initially trained in HEIs and are one of the main inputs into R&D processes. HEIs, researchers and their graduate students are also enablers of international and cross-sector cooperation including with business. As part of a new multiyear research and development plan launched in mid-2024 the government will increase R&D funding by EUR 280 million per annum between 2025 and 2030. This includes providing funding of EUR 255 million to HEIs over four years for 1 000 new doctoral student places over the period 2024-27. This will contribute to the target of raising R&D expenditure to 4% of GDP, which requires a larger pool of researchers. The government is also piloting targeted funding (EUR 10 million per annum) for new training in selected fields experiencing labour shortages (social and health care) to partially replace the adult education allowance (EUR 180 million per annum, which was cut in the 2025 Budget).
Finland has a binary higher education system (OECD, 2019a), with a more theoretical track (universities) and a more professionally orientated/applied track (universities of applied sciences - UAS). Enrolments are roughly equally divided between the two tracks with 168 000 students enrolled in university and 170 800 in UAS in 2023. UAS are expanding faster than universities. Between 2019 and 2023 total enrolments grew 10% in universities and 20% in UAS. Encouragingly, new entrant enrolments rose even faster, with new student enrolments increasing by 20% or 5 100 in universities and 30% or 12 200 in UAS, of which a significant share was foreign students. The system produces high quality outcomes, providing education that is relevant to the labour market, and scientific impact has increased above the global average, with a high share of scientific publications belonging to the world’s top 10% of most cited publications (OECD, 2022b, Research Council of Finland, 2024). As a result, graduates are well equipped to contribute to Finland’s advanced industrial economy and find quality employment.
2020 or latest, general government share of total spending on higher education
Source: OECD, Education at a Glance 2023.
Other reforms to increase quality include the University Reform Act 2010, which changed the university board structure from one involving academics and students only to a stakeholder model also including business, helping to further ensure graduates meet the demands of the economy. The system appears to be good value for money as these high-quality outcomes have been delivered despite lower spending per full-time equivalent (FTE) student than in other Nordic countries (Figure 2.5). Spending per FTE has barely increased in the 2010s and as a result, the scope to reduce per-student funding to increase places, without compromising the ability of HEIs to offer quality education, appears low (OECD, 2023). Indeed, given the current low level it would be preferable to at least maintain real spending levels per FTE student to protect quality rather than spending less per student and increasing the number of places.
Note: FTE stands for full-time equivalent. Nominal expenditure per FTE student has been deflated using CPI.
Source: OECD, Education at a Glance 2023.
The government has decided there will be no broader public funding package to increase public spending on study places during this parliamentary term. Given tight fiscal constraints and a broad societal and political consensus for not charging tuition fees for domestic and EEA students, any extra resourcing needed to expand places will have to come in large part from alternative private funding sources, including greater business sector support for HEI R&D.
2.3.1. Mobilising alternative funding sources
As in Denmark, Norway and Sweden, higher education is tuition-fee free for national and EU degree students (OECD, 2024). Tuition fees for students coming from outside the EU and EEA area were introduced only in 2017. There is a modest minimum fee of EUR 1 500 but in practice fees average between 10 000 to 13 000 euros in universities and between 7 000 and 10 000 euros in universities of applied sciences (UAS). This is often below cost and partly or fully covered by an accompanying scholarship. The heavy reliance of HEIs on public funding makes them vulnerable to the health of government finances. The University Reform Act 2010 and the UAS reform of the mid-2010s paved the way to diversify funding sources by giving universities and UAS more responsibility for financing. They have started to collect endowments and use endowment returns to augment their income. The government can facilitate HEI efforts to diversify their funding by continuing flanking reforms, notably regarding international (non-EU, non-EEA) student fees and business funding of HEI infrastructure and R&D. Higher R&D to maintain Finland’s competitive edge in business and for the green industrial transition (Chapter 4) provides a basis for attracting more funding from business. Indeed, higher private funding of HEI R&D is one of the main ways that HEIs can increase revenue from sources alternative to the government.
The government has appropriately proposed two reforms to improve HEI finances: (i) an application fee for non-EU and non-EEA students to reduce numerous applications from students without the educational qualifications required for a place in an HEI in Finland, which nonetheless must be processed, wasting HEI resources; and (ii) a requirement that fees charged to non-EU and non-EEA students for programmes not taught in Finnish or Swedish cover at least the cost of the programme (Ministry of Education and Culture, 2024). The application fee revenue will go to the National Agency for Education to cover the cost of the national application system, Opintopolku but HEIs will save administrative resources on processing fewer applications. Higher fees need not reduce international student numbers. The share of international students is around the OECD median in Finland but lower than in the English-speaking countries that have higher fees (Figure 2.6).
There may be scope to charge even more than cost for some types of programmes, notably post graduate programmes being taught in English, where international experience suggests that higher fees do not necessarily discourage foreign applications. In Australia, Canada, Ireland and New Zealand, at least 15% of students in master’s programmes are foreign despite some of the highest fees for foreigners in the OECD (OECD, 2024). The Netherlands also has a relatively high share of foreign students despite high study costs (relatively low tuition fees but high accommodation costs). Although the share of foreign students in Finland is still relatively modest, charging fees at a level that generates a profit could still raise substantial revenue. HEIs should set tuition-fees for English language courses as they wish to generate a profit to help subsidise other activities.
Share of foreign students in tertiary education by field of study, 2021
Source: OECD, Education at a Glance, 2023.
Overall innovation collaboration is strong by international standards according to the European Commission’s Community Innovation Survey, with 47% of surveyed Finnish firms undertaking collaboration with other firms, research institutions or foreign partners in 2018, which is a higher share than most EU economies. However, the collapse of Nokia sparked a decline in business funding of HEI research. This was reinforced by cuts to public spending programmes designed to crowd in business collaboration resulting in weakened private funding to HEIs (OECD, 2022b). Indeed, private funding sources other than households account for 4% of higher education funding in Finland compared to 12% in Denmark and 10% in Sweden (OECD, 2021b). Industry-HEI collaboration can improve the innovation system and indeed is the highest in countries with strong innovation systems such as Germany, Korea, and Switzerland (OECD, 2022b). Industry-HEI collaboration can also help increase HEI resources provided by the business sector. In Finland collaboration is of high quality (OECD, 2019a) but appears to be underutilised with low business funding for HEI R&D (Figure 2.7). The government’s R&D plan including funding 1000 new PhDs should help to crowd in again private funding to HEIs. Increasing the number of SMEs involved in HEI-business collaboration is especially challenging. Extra funding should be provided to HEIs that establish new collaborations involving a first time a graduate student placement in an SME as this first placement is particularly hard to achieve.
In principle, crowding in business funding for HEI research activities could facilitate shifting more public funding towards teaching activities. The Act on Government R&D Funding 2023 requires a Multiannual R&D Funding Plan to be introduced every parliamentary term. The 2024 plan will increase central government funding of R&D from EUR 2.4 billion in 2023 to approximately EUR 4 billion by 2030 with the aim of crowding in more private sector R&D. This provides a strong foundation for expanding collaboration and business funding of HEI research. A recent survey of around 1 000 businesses found 60% are ready to increase their own R&D investments significantly or somewhat along with public funding increases (Lemmetyinen et al., 2024). International research suggests that funding should also be accompanied by a broader regulatory framework that facilitates collaboration, e.g., by ensuring flexibility around the participation of HEI researchers in firms and the partnering obligations of firms (Guimón and Paunov, 2022).
An important barrier to greater collaboration in Finland as elsewhere is insufficient researcher capacity inside firms. International experience shows that university graduates joining industry is one of the main channels used to transfer knowledge between HEIs and industry (OECD, 2019b). The government’s programme to fund the expansion of PhD places will help facilitate this channel, especially as the policy pilot will require 80% of the places to be in research fields covered by the Research Council’s Flagship programme, which funds projects to facilitate HEI-industry collaboration.
Share of higher education expenditure on R&D funded by the business sector, 2022 or latest
Source: OECD, MSTI database.
2.3.2. Better matching the supply of places with the demands of students and the labour market
A key lever for reducing the supply constraint on higher education places is improving the matching of students with places that correspond to their preferences and labour market needs. The application process has been traditionally cumbersome due to the use of entry examinations by institution and programme rather than the matriculation examination, slowing entry. Another long-standing issue is that around 25% of higher education enrolments are by applicants who already have a higher study place or one or more degrees at the same level, reducing the number of places available for first entrants to higher education. As discussed below, entry, funding and other rules appear to be generating inefficiencies. This section discusses several levers for improving matching: speeding up matching of places and students in the entry system, improving the regional matching of places and student demand; reducing multiple degrees at the same level and relatedly enhancing continuing education and micro-credentials; and reducing qualification completion times.
Further increasing the performance of the entry system
While the offer of places has increased, the rate at which offers are accepted by applicants has fallen, limiting the increase in enrolments and indicating that matching of places offered and student preferences may be declining. Indeed, the share of under 25-year-olds who are first-time entrants to degree programmes has been below average in international comparison (OECD 2021a). This contributes to the average graduation age from a bachelor’s degree or equivalent being 28 years, the fifth highest in the OECD. Slow entry into higher education is partially explained by high matriculation score requirements for popular programmes; the still widespread use of programme entry examinations; and other entry rules that incentivise multiple applications over time.
A key lever to improve matching is to further streamline the HEI entry system. Significant reforms have been made to HEI entry requirements to improve matching including greater use of the matriculation (school leaving) examination to allocate places. Over half of HEI places are now awarded based on the matriculation examination. The universities of applied sciences now have a joint digital entrance examination (OECD, 2022a), while universities will reduce the number of entrance examinations from 120 to 9 from 2025.
Despite these reforms the number of applicants has declined across most age groups but by more in younger age groups. As a result, the share of older (25- to 34-year-olds) applicants in total applicants aged 18 to 34 grew from 44% to 48% between 2019 and 2024 (Figure 2.8). Many courses in Finland have restricted entry numbers (OECD, 2021b) and minimum and demand dependent matriculation or examination mark requirements. While overall rule changes including first place quota incentivise applicants to apply and accept study places that they want to graduate from, new rules can in some cases encourage delaying entry applications and accepting offers made. For example, the quota requirement to supply a reasonable number of places to first applicants can lead to repeated attempts at the matriculation examination to maximise the score presented with the first-time place application. This is so as not to “waste” the quota place by being selected to a place that is not the applicant’s first preference. A further incentive to retake the matriculation examination is that the second attempt scores are not part of the scaling exercise carried out to ensure the matriculation results conform to a set distribution. Restricting the number of repeat attempts at the matriculation examination in a given period would help counterbalance these incentives, and avoid repeated, futile attempts at the matriculation examination, as ability will play an important role in results and is unlikely to shift in the short term.
Source: Education Statistics Finland.
Young people sometimes delay their applications to higher education to retake subjects, notably advanced English, Finnish and mathematics to improve their matriculation score and maximise entry points regardless of the university level field of study. A new scoring model for matriculation and other certificate-based admission to universities will be in use in 2026. Weighting of mathematics will depend more on how important the mastering of advanced mathematics would be for the field applied to and weighting on mother tongue language course marks will grow in nearly every field.
The output funding model, which is heavily based on the number of degree completions, has many strengths. However, it may also have encouraged HEIs to sometimes set entry requirements at a high-level, restricting access to those with lesser qualifications but with nevertheless a high probability of succeeding in higher education (OECD, 2023). This in turn requires students to delay applying and keep improving their entry qualifications to get into their preferred programme. From 2025 the HEI funding model will put a 3% weight on the number of first-time enrolments, which should help to counterbalance the output incentives.
Improving the matching of the field of study offered and student and labour market demand
In 2022, the share (20%) of new entrants to higher education in engineering, manufacturing or construction was similar to that in Sweden, and one of the highest in the OECD. The share (23%) entering health and welfare studies was the highest in the OECD. By contrast enrolments in education, arts humanities and social sciences was below the OECD average. The evolution of student demand measured by applicants and places (indicated by acceptances of a place) show that the system appears to broadly respond to student demand and has expansion capacity in fields that are in demand. Between 2019 and 2024 the strongest growth in demand for places was in engineering, manufacturing and construction and ICT that grew 25% and 22% but places supplied kept up or even exceeded demand and engineering, manufacturing or construction remained the field with the highest acceptance rate of around 50% for those entering a bachelor’s level degree and having completed Finnish upper secondary school. Fields with traditionally below average (38.6%) acceptance rates of around 30 such as business, administration, and law and social sciences and journalism expanded places faster than the growth in demand resulting in an increase in the acceptance rate (places acceptances/ applicants) in these fields. The largest increase between 2019 and 2024 in the acceptance rate was in health and welfare partly due to declining applications but also increasing number of places it remains the number one field of study.
While at broad level the system appears to be responding to student demand and be in line with broad economic trends such as the expansion of the ICT sector, a more detailed study matching study patterns with information on shortages in the labour market and other policy objectives would still be warranted. For example, while places in the education field expanded between 2019 and 2024, it would be worth examining whether there are enough places in early childhood education and care to expand the sector so more mothers with young children can go back to work earlier (Chapter 1).
Improving the regional matching of places and student demand
As part of its broader and long-standing regional development objectives, Finland has promoted good access to higher education across all regions of the country including more rural ones (OECD, 2022b). The strategy has succeeded in providing HEIs across all regions and nearly all available places are taken in every region but differential access across regions remains an issue. There is a larger shortage of places in the capital region, Uusimaa, where there are only 0.76 higher education student places per person with upper secondary school qualifications compared to a national ratio of 0.93 and a ratio above 1 for many other regions (Finnish Chamber of Commerce, 2024). The regional mismatch between demand and supply is also evidenced by young people from the Uusimaa region often leaving Finland to study abroad rather than applying to HEIs in other regions (OECD, 2022b).
Keeping HEIs in all regions as attractive and efficient as possible is important for reducing pressure on places in Uusimaa, while achieving regional development goals including retaining students in the region they graduate from. Uusimaa has the highest graduate retention rate of around 80% due to it having the widest range of employment opportunities, while especially smaller regional centres struggle more to retain graduates. Most graduate inter-regional migration occurs directly after graduation, after which most graduates do not move again (Kotavaara et al., 2018). Migration is predominantly towards the four largest city regions (Helsinki, Oulu, Tampere and Turku). Attracting students and then retaining graduates requires more effort to improve efficiency and cooperation across HEIs especially by field of study. There has been an ongoing focus on increasing spending efficiency and service quality, including institutional consolidation with the number of HEIs declining from 48 in 2009 to 35 by 2018 but more needs to be done. In particular, efficiency gains could be made by reducing the number of small branches of HEIs as well as small departments (in the same field of education/research) scattered across the country (OECD, 2017).
In this context, two specific actions to encourage by increasing their weight in the public funding model are: greater HEI subject specialisation and collaboration facilitated by digital higher education practices. Greater HEI specialisation can increase quality and act as a draw card for students. It can also facilitate linkages between firms and HEIs by better matching HEI expertise with varying regional industry specialisation, improving the chances of graduates finding employment in the region and staying there. Experience in other countries suggests that HEI specialisation in expertise relevant to local industry, for example, the medical device industry in Galway, Ireland (OECD, 2013), has been a key ingredient of developing high technology regional industrial clusters outside the capital. Further specialisation would also help HEIs to form more internationally competitive research groups (OECD, 2017; OECD, 2022b).
Digital higher education and partnering of smaller and large HEIs especially by subject can help increase subject coverage in smaller HEIs, making them more attractive at lower cost than trying to be a “full-service” HEI. However, international experience shows that digital education may create quality issues (Staring, 2022). Finland has a well-developed digital education quality monitoring framework, being one of only eight OECD countries with common standards and guidance for digital higher education. Digital education technologies that diagnose learning challenges and deliver individualised support can help maintain quality.
Reducing multiple degrees at the same level
In 2023, 25% of 66 000 enrolments in university were made by applicants who already had an existing study right or degree. Some 9 400 places were taken up by those with an existing study right and a further 6900 students enrolling already had one or more degrees, often at the same level. Both reduce place availability for first-time entrants. The design of higher education pathways, employer preferences, and the output focussed public funding model all appear to have contributed to this phenomenon.
The government has proposed a “one seat rule” that would require a student enrolling in a qualification to forego existing study rights at or below the level of this qualification. This is an important step forward and should help release more places. Nevertheless, it does not prevent places being unnecessarily blocked by “ghost” students who accept but do not actively participate in a second preference degree (e.g., biology major) as a backup, while they prepare further for entrance or matriculation examinations to enter their top preference (e.g., medicine). The government may wish to accompany the one-place requirement with further obligations to complete a minimum number of papers or courses. Complying with these obligations could be incentivised by charging fees for a second enrolment where there is no evidence of attendance or course completion in the first enrolment. This would help reduce “ghost” students and help incentivise greater participation in the second preference programmes.
The design of degree programmes at universities also seems to play a role in tying up places. Traditionally, bachelor’s degrees have been relatively narrow and with few compulsory requirements. Only a few compulsory subjects and zero tuition fees have allowed students a high degree of freedom to choose their courses. At UAS bachelor’s degrees are the most common programme. However, in universities bachelor’s degrees have not been considered an independent degree and have often been treated by students as part of a combined five-year bachelor’s and master’s programme. Seemingly related to this tendency is that employers do not consider someone “qualified” from a university unless they hold a combined bachelor’s and master’s degree, encouraging students to prefer a full five-year programme, even when they already may have a degree.
Reducing the propensity to choose a five-year programme to release more places to be allocated to first entrants to higher education could be achieved by offering a wider range of more structured degree programmes. For example, offering broader but more structured bachelor’s degrees or four-year bachelor with honours programmes, especially for students who will not go into research-based occupations that would require a master’s degree. Greater structure and breadth would help establish the bachelor’s degree in its own right. Compared to the bachelor’ plus master’s, a four-year bachelor with honours programme would save 20% of the place years, can provide a track for high performing students to participate in post graduate course work, signal their achievements to employers and provide a faster track to PhD programmes abroad, especially those with substantial pre-thesis requirements (e.g., in the United States).
The output-based funding model also incentivises HEIs to prefer graduates over new entrants as they have a higher probability of degree completions, to which 62% (bachelor and master) of public funding is linked for UAS and 39% (bachelor, master and PhD) for universities. In a welcome move, the funding model has been reformed to encourage HEIs to make offers to first entrants. From 2025 the amount of extra funding for a completed first degree rather than a second or subsequent one will increase from 30% to 50%. The recent linking of some public funding for HEIs to the number of places for new entrants will also help counterbalance the output-based incentive to prefer graduates.
Enhancing the role of continuous learning and micro credentials
Finland’s adult population has the highest levels of literacy and numeracy in the OECD, according to the 2024 OECD Survey of Adult Skills (PIAAC) and was one of only two and eight countries to improve their literacy and numeracy scores respectively. However, this position reflects the historically strong performance of the education system. Maintaining it requires reforms given the supply side constraints on higher education and rapidly changing labour market needs due to globalisation, technological change, and population ageing (OECD, 2020).
Demand for second degrees at the same level has risen, putting further pressure on the system (OECD, 2023). Enhancing continuous education and post graduate pathways and qualifications and notably micro-credentials (i.e., smaller, more flexible and targeted qualifications) can contribute to more efficiently meeting the needs of adults to renew their skills through their working careers and address changing labour market demand. Better continuing education can also help ease the higher education demand supply imbalance by providing other options than acquiring another bachelor’s degree.
Public policy has encouraged participation in continuous adult learning (OECD, 2020). Despite this, the course offering is restricted, especially for adults with vocational qualifications (OECD, 2020), enrolment in short qualifications even at the post graduate level (diploma, certificates) is low (OECD, 2019a) and these qualifications are not generally given much recognition by employers. A key obstacle to greater take-up of continuous education programmes is that students who already have a degree also prefer to enrol in another bachelor’s degree because there are no tuition fees (OECD, 2020). This is inefficient not only for public finances but also for the student and the economy. Short post graduate qualifications are a more efficient way for degree holders to expand their knowledge without spending time repeating foundation higher education knowledge and skills typically already acquired via a first bachelor’s degree. Research underlines the inefficiency of multiple degrees at the same level showing they do not provide extra labour market benefits to the student (Virtanen and Vanhala, 2023).
Citizens in Nordic countries appear to highly value the absence of tuition fees even for multiple degrees at the same level. In Denmark fees were introduced for a second degree but withdrawn following public protests. Nevertheless, given Finland’s tight fiscal position and need to expand places, some adjustment of tuition fee policy appears justified (OECD, 2023). This could be imposing fees on a second degree at the same level, while having no or low tuition fees for shorter, more specialised qualifications that are cheaper, and more likely to garner benefits for the student and employers if designed well.
Expanding continuing education options is a policy priority and the Ministry of Education and Culture is working with HEIs to increase these short qualifications. HEIs already offer Open Studies where adults can enrol in degree level courses. Open studies do not lead to a formal qualification, but courses can be credited towards a degree. The government has tripled the maximum fee to EUR 45 per credit for open higher education courses to allow HEIs more room to develop a wider range of courses. This should help encourage HEI entrepreneurship in this area, which is welcome as OECD research suggests that government over-regulation has stifled micro-credential design internationally (OECD, 2021a). The continuous education offer could be widened further. This could include introducing short cycle (1-2 year) tertiary qualifications in labour market relevant topics for the large share of the adult population with vocational qualifications that want to study at higher education level (OECD, 2020). To solve the multiple degrees problem, there is also a need to build upon the Open Studies model to expand and improve the formal micro credentials offering in labour market relevant areas.
Employer recognition of post-graduate micro-credentials is likely to grow if they are sufficiently specialised, structured and lead to a formal higher education post-graduate qualification. The labour market signalling effects may be further improved by HEIs specialising in certain qualifications. The small scale and specialised nature of micro-credentials provides a good foundation for HEI-industry collaboration (OECD, 2021a), and it may in some cases be possible to charge employers some or all the costs, especially where the student is participating to address a specific skill shortage in the firm.
It will be important to pilot some short post-graduate qualifications starting with those that address skills shortages in the labour market, for example in health or in specialised chemical engineering needed for many green transition projects. These short-cycle post-graduate qualifications can also provide an opportunity for professionals to deepen their knowledge in areas that a bachelor’s or even master’s degree may not cover in detail, for example, EU and international patent laws or cover specific specialised skills, e.g., a post-graduate certificate in nanotechnology.
Reducing qualification completion times
As in many other OECD countries (OECD, 2023a) degree completion times are long in Finland. Reducing them helps to increase place turnover and supply to first entrants to higher education and continues to be a policy priority in Finland. Completion rates within the target time, as in other countries (OECD, 2019a), remain lower for men than women. For men the share of on-time completions of bachelor’s degrees rose from 30% in 2014 to 32% in 2020 and for women from 53% to 56% (OECD, 2016; OECD, 2022c). This is around the international average for men in 2020 (33%) and well above the international average for women (44%). Completion rates vary significantly by programme, with 89% of medical students completing on time but only 40% of ICT students, although this is often because ICT students gain employment before they graduate. Employers expect graduates to already have relevant work experience when they graduate and it is difficult for graduates to find full time professional employment without work experience gained during their studies. As a result, over 60% of students work during their studies, which contributes to longer completion times. Internationally, the main policy instrument for controlling completion times has been linking public funding to outputs, which Finland already heavily engages in (OECD, 2023). Finland has also increased student incentives to complete on time by decreasing the maximum period for student support payments from 55 study months (around six years at nine study months per year) to 48 study months or approximately five years and tying student support payments to credits achievements requirements. Furthermore, loan compensation depends on completion time, providing an incentive to graduate on time.
Estonia and Denmark link a small amount of funding directly to on-time completion performance. Finland’s funding model has been reformed and now also incentivises on-time completion with a funding coefficient of 1.8 for on-time completion, 1.3 if the delay is less than one year and 1 if completion is delayed by more than one year. These incentives have some disadvantages and there should be close monitoring for potential negative side-effects. This includes the extra incentive for HEIs to cherry-pick students likely to complete quickly by raising the entry requirements (OECD, 2023). It could also incentivise institutions to lower course standards to help students complete more quickly once they are admitted. A complement to current output-based incentives would be to impose some input targets on enrolment together with incentives for HEIs to support students to progress and complete their studies, as is the case in Austria and the Netherlands (OECD, 2023). International research shows that students who study harder at the beginning of their degree and gain momentum quickly have shorter degree completion times (Attewell, Heil and Reisel, 2012; Clovis and Chang, 2019). In a welcome move in 2025 the funding model in Finland will be adjusted so that 3% of funding depends on the number of first-time students. Whether this will be a sufficient weight to have an influence on first-time student numbers is not certain and the weight should be reviewed regularly.
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