Recently University World News carried a report on the call by the European Students' Union to scrap the proposed new European study loan guarantees and to use the funds instead for traditional Erasmus grants.
The ‘Erasmus Master Student Loan Guarantee’ is one of the entirely new proposals to support the higher education sector – along with the extension of Erasmus mobility to the world and the creation of Knowledge Alliances to promote more intensive cooperation between higher education and business – in the European Commission's proposal for the next generation of education and training support, Erasmus for All.
Let us be clear.
The Loan Guarantee is an entirely additional action. It will not replace traditional Erasmus grants for credit mobility, which will continue to be by far the largest part of Erasmus and which we will also expand in the new programme.
The new mechanism responds to feedback from students and student groups, which highlights that finding adequate funding to take a full degree programme – as opposed to short-term Erasmus credit mobility – in another country is a real problem for many.
Erasmus grants are currently around €250 (US$320) per month with an average duration of one semester. They are designed to cope with the extra costs of studying abroad, and to complement the study financing that students receive in their home country.
These grants have a huge impact, making credit mobility a reality for more than 200,000 students a year. But they are too modest to provide the levels of support necessary for full-programme mobility, where national grants and loans for living costs are frequently not available and where the financing need averages around €10,000 per year.
It is understandable that students would prefer to receive grants than loans. Who wouldn't?
The European Students' Union, or ESU, as one of the key student representative bodies in Europe, is rightly pressing for more funding for student support at both national and European levels.
We agree very strongly with the ESU that EU governments should make full use of the European Structural and Investment Funds, and we have been working with them to focus a larger percentage of their efforts on higher education actions.
And we have been pressing countries for 10 years or more to make their national student support more portable, so that it can be used for study abroad. Unfortunately, as last year's progress report on the Bologna process shows, not much has changed in that time.
Yet study mobility is a key contributor not only to matching students to the best possible course for them, but to providing Europe with the graduate skills it needs to improve its competitive position, relaunch growth and underpin more sustainable European societies.
So it is important that Europe step in, as it has done for over 25 years with credit mobility, to help with a challenge that individual countries have been unable to solve on their own.
The biggest need is for support for cross-border study at masters level, where costs are highest, national support is lowest and demand for more specialised courses – often not available at home – is the greatest.
But the level of resources at the European level is always going to be insufficient to give grants for full degree mobility to anything more than a few hundred students a year across the EU. Study loans for a full masters course abroad are the obvious alternative.
By agreeing to underwrite loans – on condition that lenders provide favourable, affordable terms to student borrowers – we can open up support to thousands of young people to study abroad who would otherwise be prevented by lack of resources.
Overall, the proposal for a student loan guarantee represents a relatively small proportion, around 5%, of the future Erasmus for All budget. But it has the potential to make a significant positive impact.
Working together with the European Investment Bank, for every euro committed at the European level, another five will be provided by participating lenders. This means the chance to support six times as many students.
Let us not think this is some sort of free lunch for the lenders – banks and student loan agencies in EU member states.
In return for an EU guarantee, which would underwrite a small part – around 15% – of their loan portfolio, they will be required not to discriminate on grounds of study choice, not to ask students for collateral, to apply lower than market interest rates and to provide the option of deferred repayments for up to two years.
This will give graduates the time to get into the labour market and will also ensure that the loans are accessible to students from lower socioeconomic backgrounds.
We receive requests every week from students who have found the perfect degree course in another EU country but who can find no national funding schemes, grants or loans, to support them.
No student will be obliged to take out an EU-backed loan. But now at least we will have something more positive to reply to them than our standard letter of regret…
* Adam Tyson is head of unit for higher education and Erasmus in the directorate general of education and culture of the European Commission.
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