Financing young people’s dreams through EU funding

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Young people are considered as one of the most valuable assets for the European Union as they represent an important source of skills, creativity and dynamism, qualities which are fundamental in helping Europe’s economy grow and become more competitive.

Supporting young people to join  the employment market and getting better jobs is a fundamental objective for the EU. Through a variety of policies, programmes and funding schemes, efforts are made to help young people develop their potential to shape the future of the EU and propel the digital and green transitions forward. These schemes seek to improve the skills and employability of young people, promote their social inclusion and well-being, and foster their entrepreneurial ideas.

Such incentives increased in the past decade, particularly after the huge impact of the economic and financial crisis of 2008-9, which took youth unemployment from 16.0% in 2008 to a staggering 24% in 2013. While these figures have gone down substantially, youth unemployment remains on average higher than the average. Such phenomenon is also present in Malta, where despite the country having one of the lowest unemployment rates in the Union, some 10% of young people remain without a job.

However, the EU’s efforts are not restricted at getting young people into a job; rather it seeks to incentivise them to continue furthering and specialising their studies, creating economic value-added while being able to tap into the higher-end jobs which the new economies are creating. In 2019, the EU-27 employment rate for young people aged 15-34 years who had left education during the previous five years was 76 %, with rates of 85 % for those with a tertiary level of education and 41 % for those with at most a lower secondary level of education.

While at various levels a number of educational programmes are available for young people of diverse skills, EU funding has also facilitated the development of financial instruments which target individuals wishing to further their studies in order to seek better working opportunities.

One of the most successful examples of such financing programmes operated in Malta is the Further Studies Made Affordable (FSMA) scheme which is part-funded by the European Social Fund.  The Managing Authority for EU Funds allocated €3 million to the Malta Development Bank to develop and administer the Further Studies Made Affordable (FSMA) financial instrument. Following a competitive process,  Bank of Valletta was selected to intermediate this facility, offering a portfolio of study loans of up to €8.25 million.

The Financial Instrument is financed under the Operational Programme II – Investing in human capital to create more opportunities and promote the wellbeing of society. It seeks to support the development of human capital and is aimed to meet the financing needs of students seeking to pursue a study programme for accredited courses in MQF levels 5, 6, 7 and 8 as well as other internationally-recognised certificates.

The eligible students are entitled to receive support for the activities related to tuition fees, accommodation costs, subsistence expenses and other expenses to further their studies in Malta and abroad.

Loans under this facility can be up to a maximum of €100,000 with a term of up to 15 years including a maximum moratorium period of 5 years. Students benefit from a subsidy on all the interest payments during the moratorium period which is being financed through a grant, and an attractive interest rate thereafter. Due to the guarantee of 80% provided by the MDB, no collateral or up-front contribution will be requested from the student.

Take-up of the scheme, which was launched towards the end of 2019, was much faster than expected confirming the success of this scheme which was highly instrumental in allowing young people to continue their studies in various fields, including economics, engineering, and new technologies among others. Close to 200 students have been supported with the total value of loans amounting to nearly €6.5 million, or an average loan size of €35,000, which is much higher than what commercial banks are willing to offer in absence of such a guarantee scheme. Indeed, access to student loans was thus greatly enhanced, especially for larger amounts, and made more affordable

As the European Union looks forward to the next budgeting period, young people came out once again as important winners in the negotiation between the EU’s budgetary powers – Parliament and Council – as the respective negotiators trashed out a deal in November reversing some of the budget cuts to EU flagship programmes that national governments had agreed on in a marathon summit in July.

As Europe looks to recover from the disruption of the pandemic, young people will be once again placed at the centre of efforts towards economic transformation.

This article is part of the OurEU.mt campaign, which is being managed by CiConsulta’s ComuniqEU, with the financial support of the European Union. Its contents are the sole responsibility of CiConsulta and do not necessarily reflect the views of the European Union.