Monday, April 06, 2009

More Signs from a Swedish Recession

Sweden is struggling economically. The country is officially in a recession. People are selling their tooth gold. Saab could go under leaving thousands without work. So the government is sending out the debt collectors. Breaking knee caps throughout the world. You know, if Swedes approved of gratuitous violence. Which they don’t. They are neutral.

Sweden prides itself on subsidizing education. State run higher education is offered tuition free. They complement this with money for students from Centrala studiestödsnämnden. The Central Board of Study Support. In my own amazing translation. Really they are known as CSN.

Whatever you want to call them, CSN is the agency, in conjunction with the government, that hands out money for education. The money isn’t going to provide for a luxurious lifestyle, but it’s enough to live on. You can get money for 12 semesters worth of study up until you turn 54 years old. There are all kinds of different options for people with kids and people who are older and didn’t finish high school, but for a fulltime student, it ends up being about 8,000 SEK every month combining the grant and loans. At today’s exchange rate that’s about 1,000 USD. It’s not a huge amount, but it adds up.

In fact, according to CSN’s own website it added up to 14.2 billion SEK (1.8 billion USD) in grants and 10.4 billion SEK (1.3 billion USD) in loans in 2008. That’s where some of that 47% tax burden here in Sweden goes to.

Currently, you are expected to pay back your loan six months after you receive your last payment. The interest rate is set by the governnet every year but tends to be quite low. In 2008, the interest rate was 2.1%. If you have yet to find a job, you are still expected to pay. But Sweden is an understanding place and you can apply to pay less than is expected. It’s not quite a deferral but it helps. You have 25 years to pay off the loan. Or until you turn 60. Whichever comes first.

Turns out though, that a lot of people that received an education in Sweden, or at least received CSN money from Sweden and have since left the country, are hoping to avoid paying that money back. Ever. Around 25% of people living abroad have managed to miss a payment. Or more. And a lot of them have been sliding by unnoticed. Or maybe not unnoticed, but unmolested by the Swedish debt collectors because no one has their address. Various media sources (Sydsvenskan, SVD, DN, and of course, TheLocal) have put the number at about 20,000 debtors for a total of 2.7 billion SEK (about 340 million USD).

Sweden is already hunting down people who have moved to the UK and the Nordic countries. In 2009 they will expand that list to an extra 10 countries: Spain, Portugal, France, Germany, Holland, Belgium, Switzerland, Ireland, Italy, and Iceland (which I already consider to be part of the Nordic countries but I digress.). They are also turning to help from detectives in France, as well as Greece and Australia.

Fifteen people are going to be sitting up in Umeå, just a stone’s throw away from the Arctic Circle, and scouring the internet. Everything from your classic Google search to sifting through social networking sites like Facebook. If that’s not reason enough to never stick your address on Facebook, I don’t know what is.

There is a good chance that this is just a coincidence. That the search for 2.7 billion SEK isn’t based on a struggling economy. Of course, calling in the debts could be a sign that Sweden is battening down the hatches and trying to weather the economic storm through whatever means necessary. Unpaid loans in times of economic crises are not good for business. Or government. For years, Swedes abroad have known that there would be little consequence for not paying back their CSN debt. Since moving here, I have had people tell me that I should just milk the system for the CSN money, and not worry about the loans when I move. So this decision raised my eyebrows. I even shook my head a bit.

Collecting on the debts of tens of thousands of Swedes defaulting on their loans while living out of the country will help the country coffers. It might seem that this goes against the idea of Sweden being a welfare state. A country that tries to avoid exposing its citizens to any unnecessary hardship. But these are times of hardship for everyone. First and foremost for Sweden come Swedes. In Sweden. Even if it means chasing down Swedes just because they don’t happen to live in Sweden. A sort of protectionist attitude to the extreme. Damned the consequences.

Nathan Hegedus writing for the blog on The Huffington Post does an excellent job of commenting on his firsthand experience with the protectionist attitudes of Europe. Maybe not exactly what he experienced, but parallels can be drawn.

Whatever the reason, I think this needs to happen. Granted, 2.7 billion SEK is just a small percentage of the money loaned out. But it adds up. A penny saved is a penny earned. A bird in the hand is worth two in the bush. Den som spar, han har. All that good stuff. So in times of economic recession, Sweden is collecting.

Luckily, for those of you Swedes in the US, you seem to be safe. For now. But beware, if Sweden continues to slide further into a recession it may be just a matter of time.

Welcome to Sweden.

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  1. Hm. I wonder if that I means I would be able to skip out on my US student loans since I'll be in Sweden. I hadn't thought of that. Thanks, Hairy!

  2. So my husband's been making those CSN payments for nothing?! We could've ignored them, and they wouldn't even have sent an "ahem, perhaps you didn't realize you still owe us money"-type of letter?

    We recently paid off our mortgage-- you know, on our own, without help from other US tax-payers-- and now, on top of that poor planning, I learn *this*! Hmph!

    I guess this is what comes of being responsible adults. ;o)

  3. I don't think this is only about a need to get the money back. I think the problem is that too many start seeing it as acceptable to skip paying their loan. Since it is more common now, especially with the EU, to move abroad CSN has to fight back to change the trend.

  4. I don't really get what the Huffigton post article had to do with anything, I not sure what he was trying to say in the article other then countries in Europe think different? Uhm... yah?
    Of course we don't trust any other leaders to look after Sweden, what country would do that? Europe is not country even if some Americans claim to believe so(zing!). Nah jokes about dumb Americans aside it do seem like he was trying to make the argument that we should be waving the EU flag around like Americans wave their flag. And that's kind of weird so I assume I got the article wrong. :)
    And they have been after those people who have not been paying their loans for quite a while, don' really think it is connected to the recession. And haven't you heard, Jim Cramer say's the recession is over. Let us all rejoice. ;)

  5. @m8surf – no problem at all… I do what I can. Always good to avoid paying loans. At least that’s what Ive heard.

    @Michael – Could be. Damn that whole responsibility thing. Always comes back to bite you.

    @nevil – I think that definitely plays a big role in why they are doing this. But the timing is very coincidental then.

    @anonymous – I think the point was that in time of economic crisis, and in the wake of the G-20 meeting, that everyone working separately only looking out for their own countries only serves to further the protectionist attitudes that just aren’t that effective in the global economy.

    They have been after people that have been paying these loans, but they haven’t really been after the people who have been living abroad and not paying these loans. I think it was just over a year ago, the Swedish government did an audit and were hammered for all of the unpaid loans from abroad and that’s what caused them to start going after these people. So the chasing of unpaid loans abroad is definitely a very new thing. In fact, from the article: “-Vi som myndighet är egentligen den första som är på banan vad gäller statliga myndigheter att kräva in fodringar i utlandet. Det är obruten mark vad gäller statliga myndigheter, säger Klas Elfving.”

    And, if Jim Cramer says it is so, then clearly all is right with the world! Buy! Buy! Buy

  6. Im very glad to hear this, to me it seems like socialdemokraterna just hung out and did'nt do anything. Moderaterna on the other hand is busy doing what's right. More harsh rules on A-Kassa, going after the CSN-cheaters, lowering taxes. This is great.

  7. Ill agree with that. Overall, Im pretty impressed what Moderaterna have been doing in terms of fiscal policy.

  8. Hello everybody! I came across this blog today and I'm really enjoying it so far. I'm a 13 year old Swede, and it really is exciting to see how people from other countries are having it in Sweden.

    BTW, where in Stockholm do you live Hairy Swede?

  9. Glad youve been enjoying it.

    I live near town which is kind of nice.

  10. It's not because of the recession that they've suddenly realised they have money (our money in fact) to collect abroad. The law didn't permit CSN to do it before.

  11. hmm.. I haven't heard anything about a new law being passed for that. although, if thats the case then it was perfect timing.

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