Funding Mobility: Erasmus+ Master Loan Guarantee Facility

IIE’s 2014 green paper “What Will it Take to Double Study Abroad?” identifies cost as one of the three main barriers to international exchange.  The EU’s Erasmus+ Program has recently taken a step towards eliminating this barrier amongst their members through the creation of the Erasmus+ Master Loan Guarantee Facility.  This initiative, launched in December, 2014, “aims to increase access to finance in order to enable students, regardless of their social background, to take a Master's Degree in another Erasmus+ programme country, as a contribution to tackling skills gaps in Europe.”  Students apply for loans of up to EUR 18,000 through participating banks and loan agencies.  These loans do not require collateral and offer low interest rates and the option of delayed pay-back.  When fully up and running, it is expected that it will serve 200,000 students.  This program increases mobility opportunities for students who previously were not able to get their masters in another country.  Increased mobility will hopefully lead to an evening of the skills gaps in the EU.  

This program has benefits for everyone involved.  For the students, it provides them an opportunity for mobility that they couldn’t have afforded previously.  For EU member states, it provides an increased pool of students for their schools, and helps provide their own citizens and education to bridge the skills gap.  For the lenders, it provides them new loan customers whose credit risk is covered by the EU, so if the student is unable to pay, the lender will still get their money. 

The IIE green paper lays out several suggestions on how to solve the cost barrier in international exchange.  However, most of their suggestions involved finding funding from corporations with oversea interests.  While I agree that ideally, having students’ costs be completely covered by someone else is better than providing them loans, I think the Erasmus+ Master Loan Guarantee is a step in the right direction, and more realistic at this point in time.  Having them not require collateral means that they are available to students who previously wouldn't have been able to get them.  The low interest rates and delayed pay-back ensures that students won't have as much trouble getting out of debt afterwards as is often the case.

Cost of international exchange programs is on of the largest barriers for students, and the Erasmus+ Master Loan Guarantee Facility has taken a step to alleviate this barrier.  In doing so, the EU has increased access to student mobility to students who have never been able to participate in these types of activities before.

References:
European Investment Fund.  (2015).  Erasmus+ Master Loan Guarantee Facility.  Retrieved from: http://www.eif.org/what_we_do/guarantees/erasmus+master-loan-guarantee-facility/index.htm

Institute of International Education. (2014). What Will it Take to Double Study Abroad?. Retrieved from: http://www.iie.org/Research-and-Publications/Publications-and-Reports/IIE-Bookstore/What-Will-It-Take-To-Double-Study-Abroad

Prag, Nick. (11 June, 2015).  Mobility Boost for Masters Students.  EUbusiness.  Retrieved from: http://www.eubusiness.com/Members/nickprag/masters