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Student loans Financing-funding structures opportunities

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Student loans Financing-funding structures opportunities Powered By Docstoc
					       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!

				
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