The European Commission recently published an agenda for the
modernisation of Europe's higher education systems, which is a
revamp of its 2006 plan. It is important to remember that the
commission exists to support national higher education efforts, but
its role is crucial, particularly with regard to funding.
Ambitious EU Commission plans to foster
The commission is seeking to increase the budget share from the
central European Union financial framework from 2014 onwards by
more than 70%. That is money invested directly in more student
mobility grants, more cooperation support and more action on policy
But more importantly, while the overall EU budget is set to remain
approximately the same size, the big increase in higher education
investment sends an important message.
If we consider that the potential of our universities is still
hidden to a degree and that we need to do something to release it,
then the announcement is a clear communication that greater
investment is needed.
The commission does not put it so bluntly, but its actions
hopefully speak for themselves. We must bear in mind that
traditionally, spending on education has been tiny compared to the
overall size of the EU budget - the sum proposed represents only
around EUR15 billion of an overall EUR1 trillion budget. However,
universities will also benefit from the research and innovation
budget and cohesion funds.
Call for widening participation
Interestingly, the announcement focuses on two crucial issues
that are of great importance to the success of higher education and
the role it can play in personal, societal and economic
development. Namely, that we need to do more to unleash the
potential of every individual by widening participation, and that
we need an education system that is more attuned to the needs of
society and the labour market.
This means that teaching and learning needs to become more
student-centred, focusing on building competence and keeping
citizens active for longer.
Europe has long decided that encouraging greater mobility of
students and staff plays a key role in bringing down barriers to
learning and freedom.
The commission has been at the forefront of promoting mobility,
through specific policies and initiatives such as the Erasmus
programme, which has sent more than two million students for a
period of study in another country in Europe since it was
The Erasmus generation is ultimately European, but also more
adaptable to social and economic change. Being able to study in
different countries enables students to become better in
transversal skills, which have a great long-term value.
Erasmus has been based on providing grants and it has also been
tuition-free - students are not required to pay the fees of the
institutions at which they spend time abroad.
The commission now seems eager to try something new - awarding a
loan guarantee of EUR100 million a year to help masters students
fund full degree study abroad. In the past, mobility has been
limited for such students as most financial help with fees has been
for national-level study.
Thus a student from a lower socio-economic background would face
an uphill struggle to find the funds to do a full degree in another
country in Europe. The commission therefore has a good target
audience and it knows what that audience needs, following a
feasibility study that it carried out.
Shift from grant to loan system
However, this new policy also sends another signal to governments
- invest in higher education, but do it through loans so that
students also contribute to the costs.
Loans are nothing new and many governments have put them in place,
often with the endorsement of students, especially when schemes are
designed to have so-called progressive elements like income
contingent repayments, grace periods and subsidised interest
All of these have also been proposed by the feasibility study,
which also envisages a new EU institution that will manage a
portfolio of EUR60 billion, which in the current political climate
The plan is not a concrete proposal, but an idea for guaranteeing
such loans through private banks (those that the governments still
keep on bailing out). Thus we can only guess what the real
conditions of the loans would be for students. No current study,
including the feasibility study, has examined the actual
attractiveness of such loans.
Secondly, the commission seems to be expecting everybody to
immediately jump at the opportunity to endorse its idea even though
there is not much detail about it and there has been no meaningful
democratic dialogue with member states and citizens.
Upcoming debt generation
Thirdly, guaranteeing such loans needs to give students more
than what member states are doing already for students, and must
not act as a disincentive for governments making their own funds
available for mobile study, something that has been a key promise
of Bologna process ministers since 1999.
Fourthly, given that the scheme involves private banks, it is
doubtful whether these could offer subsidies or tie repayments to
students' later earnings. Such a scheme would not take into account
individual financial gains or losses since higher education will
not yield huge fortunes to graduates by itself.
Thus the scheme actually doesn't appear to provide many options
for increasing social mobility, as the loans are likely to be
expensive and poorer students are more debt-averse.
Finally, one wonders if this scheme represents a change in the
European Commission's approach to funding streams. The commission
has stated publicly that it still considers grants to be important
and that loans are simply an additional means of funding
But we surely need to admit that rising youth unemployment and an
increasing graduate debt burden might become an explosive mix,
leading to greater social divisions between young and
What goes through the heads of this generation? How will such
schemes affect today's and tomorrow's indebted generation of
graduates? How will they affect graduates' plans to become parents
and build capital for the future, for pension and increasing
Of course, some economists do not consider this a long-term
problem, but the perception that it might be is there and, as
history has shown, perceptions are sometimes enough to provoke a
Allan Pall, Chairman of the European Students' Union (ESU).