Student loans Financing/funding structures opportunities Romualdo Massa Bernucci Director, Lending Operations in Italy and Western Balkans EIB Luxembourg, 23-01-2009 Student loans: Financing/funding structures opportunities 1. The current situation in Europe: a contrasted picture 2. How could EU support be developed? 3. EIB existing financing of student loans schemes: features and instruments 4. Options and instruments to be explored 5. Potential discussion points for the panel The current situation in Europe: a contrasted picture Three dimensions: • Are student loans schemes available? • Do they cover the direct costs of education? • Are they “portable”? Countries with no “affordable loans” Countries where student loans exist but they are “partial” Countries where SLS covers full cost of education in the country and allows student mobility (e.g. Sweden) The current situation in Europe: a contrasted picture (cont..) Challenges: •Introducing student loan schemes where they are not available or expand scope where they are “partial” •Developing a student loan at the “pan-European level” With the objective to enhance social mobility (equality of opportunities) and geographical mobility (within the country and within Europe) How could EU support be developed? Topic is high on the political agenda given the pressure on public financing of higher education On going reflexion on the potential implementation of a pan European scheme with the European Commission Need to establish complementarity with existing national schemes Political support and technical input will be required EIB existing financing of student loans schemes: features and instruments EIB eligibility: Knowledge economy EIB provided funding but did not share default risk 5 EIB interventions so far in 3 different countries: Italy, Hungary and Germany Intesa Bridge (Italy) Diákhitel Student Loan (Hungary) Studienbeitragsdarlehen NRW (Germany) Studiendarlehen Hessen (Germany) KFW Meister BAföG (Germany) EIB existing financing of student loans schemes: features and instruments (cont…) Intesa Bridge: Financing Technological university students in Italy Pilot Project Loan amount: EUR 25m Maturity: 12 years Promoters: the Politecnici of Milano, Torino and Bari – Extended to include more Universities Loan intermediated through a bank (Intesa) with an extended network in Italy Default – Financed by Foundation and Universities EIB existing financing of student loans schemes: features and instrument (cont…) Diákhitel Student Loan (Hungary): EIB Loan amount: EUR 100 m + EUR 150m Maturity: 15 years Promoter: Diákhitel, the Hungarian state- owned student-loan company Loan to Diákhitel with state guarantee Default: beginning State and students; now only students EIB existing financing of student loans schemes: features and instruments Studienbeitragsdarlehen NRW (Germany): Financing of tuition fees of University of Applied Sciences in North- Rhine Westphalia EIB Loan amount: EUR 125m Maturity: 20 years Loan intermediated through the NRW Bank (Landesbank) Default: financed by Land Options and instruments to be explored Establishment of a pan-European scheme? Complex Requires a lot of technical input from many participants Support from Institutional Players EC/ Member States Foundations Universities (and students) ….. Issue: Establishing and Financing a Default Fund Options and instruments to be explored (cont…) Creation of a Fund to provide financing and/or guarantees to Banks Experience with microfinance Fund for Western Balkans Funds are channeled through local banks Default rates are extremely low EIB could participate in the more senior tranche? Possible players Regions EC/Member States Foundations … Options and instruments to be explored (cont…) Risk-sharing scheme with commercial banks and public funding associated? Widening of the current EIB cooperation with commercial banks? Public national and or EU funds would be used to cover the first loss piece Potential Benefits Ability to maintain attractive loan rates for students Increased volume of beneficiary students because of the leverage effect of the risk sharing mechanism Good coverage of the student population resulting from the use of commercial banking distribution networks, including a potential pan-European dimension Options and instruments to be explored (cont…) Establishing an SPV at the EU level Guarantee from EC/Member States? EIB to finance SPV (business as usual) Default Fund to be financed by Universities, students, EC/Member States Foundations… Bank with extended network to make product available in several countries EIB to finance bank (business as usual) Default Fund to be financed by Universities, students, EC/Member States Foundations, bank? Recurrent Issue: Guarantee and financing of default Options and instruments to be explored (cont…) Thanks!
Pages to are hidden for
"Student loans Financing-funding structures opportunities"Please download to view full document