It's the same in Finland, at least in universities. If you don't pass your courses, the state stops paying the student benefits[1], but you can stay at the university. There is another, very low number of courses you need to pass every year in order to stay in, but that is very low indeed, it's only meant to keep registers clean of people not studying at all.

1: That's right, Finns are paid to study. I think students in most of the Nordic countries are.

edit: formatting