Erasmus+ Masters Loan
As part of the European Union’s Erasmus programme to facilitate international movement of students and academics, a new facility for Master’s students is starting to come into existence. Between now and 2020 it is estimated that as many as 200,000 students will be able to benefit from this new source of funding.
What is the Erasmus+ Masters Loan?
The general principle of the Erasmus+ Masters Loan is that any EU national who wishes to study in a new EU country can access loan funding to support them during their education abroad. Students cannot apply for this funding to study in a country where they are ordinarily resident nor where they have completed their Bachelor’s degree. So, for example, a British resident who has taken their Bachelor’s degree in the UK would be able to access this loan to study anywhere else in the European Union. A British resident who has taken their Bachelor’s degree in The Netherlands, for example, would be able to access this loan to study anywhere except the UK and The Netherlands. It is important to distinguish between residency and nationality. The purpose of the loan is to encourage you to study somewhere other than where you ordinarily live or have already studied.
That is the theory. The reality is not quite there yet. Not every country has signed up to this scheme. As of January 2016, only France and Spain are part of this programme and that is the reason why you will find all Master’s degrees in those countries listed on this site but only isolated examples in Italy, for example.
In some countries there has been resistance to the introduction of the Erasmus+ Masters Loan, largely because they already have an existing student funding arrangement for their own Masters students, and in many countries this funding is available for study abroad. The UK is the only major European country where there is a distinction between the way that undergraduate and postgraduate students are funded. Obviously, until the recent introduction of postgraduate loans in the UK, British students were left completely without state funding for their Masters degrees. As a result, the introduction of Erasmus+ Master’s Loans is perhaps better news for British students than for any other nationality in Europe, or at least will be once they are available in the United Kingdom.
How does the Erasmus+ Masters Loan work?
The Erasmus+ Masters Loan is a European Union project but it is not administered by the EU. Individual banks and other financial institutions are responsible for making loans directly to students. The loans are guaranteed to a certain extent by the European Investment Fund, meaning that banks are able to make loans directly to students at a lower than market rate of interest because the risk of repayment is reduced.
In contrast to Student Finance England loans, the Erasmus+ Masters Loan is a bank loan and behaves as such; students will have to repay it after graduation. However, if students find themselves unable to pay back the loan guarantee comes into effect and the lender can reclaim some of the loan directly from the European Investment Fund.
How much can you borrow from the Erasmus+ Masters Loan?
Assuming you meet the requirements for the loan you can borrow up to €12,000 for a one-year programme and up to €18,000 for a two-year programme. This can be used for the payment of tuition fees or living costs. There are no separate loans for each of these requirements.
You don’t need to borrow the full amount and you can add this funding to any scholarships or bursaries for which you might otherwise be eligible. If you study in another EU country where domestic funding might also be available (for example, Collegegeldkrediet in The Netherlands) you can combine this with the Erasmus+ Masters Loan.
You can even combine an Erasmus+ Masters Loan with an Erasmus+ Grant if you are planning to take a two-year Master’s degree with a semester in another country. For example, if a British student were to take a Master’s degree from a French university that included a period of time in Germany, it would be possible to get the Loan for up to two years total study and the Grant for the period of time those studies were in Germany.
What rate of interest is charged on an Erasmus+ Masters Loan?
There is no centrally mandated interest rate for this loan. Because the banks that provide this loan will be located in various countries the relevant rate of interest will be determined by local financial conditions. In order to be allowed to provide the Erasmus+ Masters Loans banks must agree to provide a lower rate of interest than would ordinarily be the case because of the guarantee provided by the European Investment Fund.
The precise repayment terms will also vary from one provider of the loan to the next. It is the intention of the EU that there be multiple providers in every country, thus creating an element of competition but we are a long way from that point just yet.
Are you guaranteed to get an Erasmus+ Masters Loan?
No. The banks that provide these loans will perform their usual background checks before making a loan and their standard credit scoring procedures will apply. However, they cannot discriminate based on your field of study or your nationality, race, religion, sex, sexual orientation etc.
Banks cannot ask you to provide collateral for the Erasmus+ Masters Loan as they already have the security of the EIB guarantee. In effect, the European Union is providing the collateral for your loan.
You must also be eligible for the loan based on your chosen university. Your university must hold the Erasmus Charter for Higher Education. A list of such universities can be found here: https://eacea.ec.europa.eu/erasmus-plus/actions/erasmus-charter_en
Where can you currently get an Erasmus+ Masters Loan?
Currently, the only countries where this scheme is operational are Spain and France. You can find details on the local providers on the relevant financial information pages of the website.
What this means in practice is that French or Spanish students can access these loans to study anywhere in the EU. British, or indeed other EU residents, can only access the loans to study in France or Spain at the moment, although double degrees that include up to half their study time in other countries can be funded for their entire duration. This will change. Part of the intention of the Loan scheme is that students should be able to apply in any country to study in any other country. This is in order to create competition between providers. In theory, it should ultimately be possible for a Slovenian bank to lend money to a British student to study in Sweden but this does not seem to be a possibility at the moment.
Because we expect there to be many more providers of the Erasmus+ Masters Loan over the coming months and years, we will not list them all on this page but you can find details of national providers on the financial information pages of our website.