Expanding EU support for cross-border learning Update on the proposed Erasmus Master student loan guarantee Julie Fionda European Commission, Higher Education Policy Unit

In a nutshell Banks/student loan agencies agree to lend to mobile masters students and on favourable terms (interest rates, repayment terms, grace periods etc.) In return, EU provides part-guarantee against non-repayment (reduces some of the risk of lending to mobile students) Possiblity of access to lower cost capital to lend to students via European Investment Bank

What is covered? partial guarantees to financial intermediaries (up to 16% of portfolio) for loans to students at the most favourable possible conditions Full Master’s degree at a recognised higher education institution in a participating country Mobile studies: neither their country of residence nor where they obtained their qualification granting access to the Master’s programme.

How implemented? management by European Investment Fund (EIF) EIF contracts with financial intermediaries Geographic coverage: EIF aims to select financial intermediary from each participating country Student interface entirely with a participating FI If student defaults FI applies to Guarantee for part of the loss. (if repayment resumes, guarantee refunded) Possibility of EIB support for capital 4

Selection of Financial Intermediaries call for expressions of interest (rolling), best market practice with regard, inter alia, to: the volume of financing to be made available to students (leverage) the most favourable conditions offered to students, subject to compliance with the minimum standards access to finance by all residents of participating countries fraud prevention measures; adherence to the Consumer Credit Directive (2008/48/EU) → demonstrate best transfer of EU support to students 5

Key features Guarantees for new eligible student loans up to a max of €12,000 for a one-year programme and up to €18,000 for a programme lasting up to 2 years, (or equivalent in local currency) Repayment: ‘hybrid’ model (flat rate with safeguards to protect against graduate hardship)

Minimum standards no collateral or parental guarantee non-discriminatory (gender, ethnicity, discipline, …) as part of the assessment process, FI to consider student’s risk of over-indebtedness, taking into account levels of accrued debt and any legal judgement for bad debt significantly reduced interest compared with market rates ‘grace period’ - min 12 months ‘payment holiday’ - min 12 months over life of loan 15yr min maturity with no penalties for early total or partial repayment option of interest deferral during the study period insurance against death or disability 7

More? Financial intermediaries may offer income-contingent repayments ; Improved terms taken into consideration when selecting financial intermediaries, such as: longer grace periods longer breaks from repayments later maturity, to take into account specific needs of graduates, such as those who subsequently pursue doctoral studies or to allow more time for graduates to find employment. 8

Monitoring and Evaluation Progress monitoring continuous + annual report numbers of students volume of lending debt and default levels profile and characteristics of students supported (SES, study subject, country of origin and destination) Evaluation as part of Erasmus for All mid-term evaluation (2017) to examine the effectiveness of the Facility, incl. an assessment of effects beneficiaries and HE systems Beneficiary survey Perspectives of Member States and stakeholders

Budget Commission proposal (2011): 880m€ of Erasmus for All programme = approx 5% MFF agreement – 15% Council position:2% (individual countries substantial differences in views) European Parliament Position: 5% 10

Negotiations Concluded under IE Presidency? COREPER – 23 rd May Next and possibly final IE PRES trilogue 27 th May Other Programme elements being discussed incl: Programme names and ‘brand names’ of actions Indicators Use of delegated acts to adopt part of work programme Administrative budget for national agencies 11

Thank you