Spain has been picked to pioneer the European Union’s new Erasmus Loan Guarantee Scheme.
The scheme, launched in June, offers loans of up to €12,000 for a one-year master’s degree in another European country or €18,000 for a two-year masters abroad.
The initiative will eventually receive around €500 million from the budget of the huge Erasmus+ student mobility programme, which the European Commission says will help to raise up to €3 billion in loans.
Erasmus+ Master Loans will be pioneered with €30 million worth of loans being offered by Spain’s MicroBank, the social bank of La Caixa.
Both incoming and outgoing
These will be from both Spanish students pursuing postgraduate studies abroad and students from other Erasmus countries going to Spanish universities for master’s courses.
The financial risk of the loans will be shared between European Union and participating financial institutions, thanks to support from the European Investment Fund.
Nathalie Vandystadt, European Commission spokesperson for education, culture, youth and sport, said: “The Erasmus+ master loans will provide more funding for students who wish to study abroad but may not be able to do so without support.
“Students can benefit from favourable conditions, making the scheme available to students from all backgrounds. With few national loans systems supporting studies abroad, the scheme will also help to overcome obstacles to student mobility.
Extra source of student funding
“The new tool is an extra source of student funding, complementing the range of study grants available under the Erasmus + programme.”
The loans will be eventually rolled out to all 33 Erasmus programme countries to encourage more postgraduate student mobility up to 2020.
No collateral will be required from students or parents, to ensure equality of access.
But not everyone is happy with the loans
The European Students Union (ESU), which represents the interests in 39 countries, has been critical of the master loans idea since it was first mooted three years ago.
It fears the loans will put students into more debt and criticises the lack of a full income-contingency element for repayments to protect the lower paid and unemployed graduates.
Although the loans will be offered at favourable interest rates, repayments will start within two years of graduation which the ESU feels may not be enough time for graduates to find a good job in the current economic climate in the European Union.
The European Commission timed the launch of the master loans with an announcement of a new Erasmus+ Student and Alumni Association (ESAA), to represent more than 3 million Erasmus+ students up to the period 2020.
The new association brings together for existing bodies and the local networks: Erasmus Mundus Students and Alumni Association, Erasmus Student Network, garagErasmus, or gE, and OCEANS network.
The ESU is worried the new umbrella organisation will not be really independent of the commission and private enterprise interests.
Commission spokesperson Nathalie Vandystadt said the ESAA will not try to compete with student representative bodies, but aims to improve the study abroad experience by bringing together the expertise of four existing support organisations.
“ESSA is fully autonomous in its decision-making. As an important stakeholder in the field of education, the commission will support its logistic and organisational set-up.”
Find out more about why the ESU is opposed to the new master loans by reading an interview with Elizabeth Gehrke, chair of the ESU, in University World News, here.
Words by Nic Mitchell
Pictures of students from Africa, Latin America, Asia, Australia, and many European countries at Universidad de La Rioja, Spain.