From Dismantling the Class Society to Investing in Human Capital: The Rise and Fall of the Selective Student Finance System in Sweden 1939–1964

Abstract

The article highlights the history of the early gift-based and selective student finance system of the social democratic welfare state in Sweden, targeting students from the working classes. This lesser-known system, introduced in 1939, preceded the present loan-financed and universal system established in 1965 designed to reach students from all classes. The arguments for launching the selective system, how this system met the objective of broadening the social recruitment of students and the arguments behind the dismantling of the system are analysed. The equalising effect of the selective system was strong, but student loans were nevertheless more compatible with an emerging idea, imported from the Chicago School, that education could be considered an (loan-financed) investment in human capital, that provides future yields rather than a right. Historical institutional theory is used to analyse the shift between two diametrically opposed models that took place within the same Social Democratic regime.