SHIFT brings together 8 partners from 5 countries representing HE system, students association and NGOs, private sector. Such diversity adds value to the partnership that has the complementary skills, experience and expertise to carry out the following activities:
- Map Financing Dynamics of HE
- Develop the SHIFT Innovative Financial Model
- Test and Validate through Stress Testing the innovative financial model
- Develop the SHIFT Implementation Package for its adoption in HEIs
The methodology is technical (i.e. financial engineering) and operational (i.e. governance structure) and is based on the sequenced approach of
Mapping -->Development --> Validation/Stress Testing --> Implementation
SHIFT expected results are:
- innovative financial model, developed, tested and validated through financial stress testing: partners will develop and validate the model and will outline the structure of the financial instrument (size; investment horizon; asset class; risk profile; etc) and the governance mechanism (composition of the governance structure; representation of public, private and social sectors; division of responsibilities between financial management and operations; etc)
- the implementation package to apply and deploy the innovative model: SHIFT will produce an implementation package detailing the technical, operational and administrative aspects of how to implement the SHIFT model and formalize the involvement of public and private participants (i.e. Memorandum of Understanding, Terms of Reference for fund managers, etc)
SHIFT will produce tangible impact at the systemic level for the HE system across EU: the innovative financial model will bring about threefold impact:
- increased financial resources to enhance HE access and participation
- improved sustainability of public resources for HE
- innovative PPP mechanism
In the long-term, SHIFT “support HEIs to implement necessary reforms in line with the 2011 EU Modernisation Agenda and its priority areas”. The whole EU Modernization Agenda pivots around the 2 crucial aspects of governance and funding of HE: SHIFT tackles both governance (it introduces an innovative mechanism for the management and governance of HEIs) and funding (it established an innovative model for financial measures in favor of HE students).
The project status
Mapping Financing Dynamics
of HE Students
Develop the SHIFT
Innovative Financial Model
Test and Validate
through Stress Testing
the innovative financial model
Develop the SHIFT Implementation Package
for its adoption in HEIs
Intellectual Output 1
Mapping Financing Dynamics of HE Students
O1 is the analysis of HE funding models and options for students to finance their education and pay tuition fees currently in place in the EU and selected Member States, specifically Member States represented by the partnership (Italy, Poland and UK) and other countries representative of meaningful case studies (i.e. Germany, France, the Netherland: the specific number and type of countries will be finalised in the preparation phase of the SHIFT project). O1 will identify specific drivers and inhibitors of current funding models for HE students to provide elements for the design of the innovative model (O2). The approach is both quantitative and qualitative, as partners will analyse:
- Common patterns of use of public funds for HE students
- Student loans and other financial products (cash advances, scholarships) available to students, and their characteristics (i.e. merit based, income based, and so on)
- Ratios of public and private funds mobilised to fund HE students: the financial products identified above are funded by public or private sources
- Shortcomings, drivers and inhibitors of the funding models currently in use;
- Rigidities in the access to finance for HE students
- Dynamics, potential mismatch and inefficiencies of the funding of HE students, from both supply and demand sides
- Issues pertaining to HE students’ financial literacy and capacity to discern financing options for their studies.
The partners will take stock of the various funding models for HE, compare the pros and cons and extrapolate positive elements to be considered for the development of the model in IO2.
Elements of innovation: IO1 is innovative as it identifies dynamics of HE students’ access to finance and financial literacy. At present, there is no taxonomy nor coherent definitions (at the EU level, and in many cases within Member States) concerning HE Students Financing policy measures, products and initiatives. The key element of innovation of IO1 is the definition of a methodology to classify (and hence identify) such policy tools and measures across different settings, countries and HE dimensions.
Expected impact: IO1 is instrumental to the development of IO2. Besides this “internal” impact for the SHIFT Project, IO1 is also expected to produce impact for the community of practice of student loans and financial literacy as it allows to carry out a comparative analysis of practices, methods and programmes pertaining to HE students’ finance across EU. Hence, the impact is not only on participating organisations but also – and most importantly – for the stakeholders (i.e. governmental agencies, HEIs, financial intermediaries and HE students) who will be able to know about other countries’ experiences and models.
Transferability potential: the Common Methodology is poised to be immediately used in other contexts outside of the SHIFT Project and potentially in other fields of education (especially VET). The methodology itself will also be embedded in the IO4 Implementation Package and made available without restrictions through the OER Platform.
Intellectual Output 2
SHIFT Innovative Financial Model for HE Students
In Intellectual Output 2 the partners develop the innovative funding model for HE students. The innovative model envisions the establishment of a Fund that pools money from both public and private sectors, manages the finances to generate revenues to be redistributed to HE students in the form of grants and/or soft loans through financial intermediaries and/or other retail financial service providers.
The type of financial product (grant and soft loan), the type of financial intermediaries (i.e. savings banks, financial service providers embedded in the HE sector, specialised HE students’ financing agencies/intermediaries) will be defined in this output on the basis of the results of the stocktaking of existing instruments and their pros and cons.
Output 2 is organised to allow the partnership to identify the most suitable structure of the Fund as well as its internal and external mechanisms, specifically:
- Structure of the Fund, i.e. Special Purpose Vehicle, Fund of Funds, Trust, Endowment Fund, etc.
- Appropriate stakeholder representation within the system/shareholders composition: actors from public and private sectors, i.e. EU National and local Government, Private Sector, third sector (i.e. students’ associations, charities and foundations)
- Governance models: in order to ensure transparency and efficiency of the SHIFT model
- Financial requirements: the partners will identify the most appropriate sources of funding, relative ratios, as well as investment requirements and type of investments
- Financial products and relative ratios: partners will define the types of products and services that can be provided on the basis of the Fund, choosing between loans and grants
- Financial literacy component: partners will also develop the aspects of financial literacy to be embedded in the SHIFT model to “empower and equip” the demand side (HE Students) to make informed financial decisions.
The above elements will be defined by the partners on the basis of O1. The approach is technical as IO2 will develop an innovative funding model for HE students on the basis of the current financial modelling methodologies and the experience of each partner in defining financial models and structuring public-private partnerships. Crucial for IO2 is the involvement of the various stakeholders for the definition of the governance structure and internal mechanisms of the SHIFT Model. This will be ensured by the composition of the partnership that includes HEIs, NGOs, Private Sector.
Elements of innovation
Intellectual Output 2 is highly innovative as it aims to improving the models of HE Students’ financing. At present, HE students’ financing models are based purely on public sector grants or private sector loans (only in isolated Member States hybrid forms co-exist). SHIFT innovation lies in the development of a financial model that engages both public and private sources of funding, based on a governance mechanism that guarantees impact and promotes informed financial decisions by HE students.
SHIFT’s impact is manifold:
- SHIFT is poised to generate positive impact at systemic level by introducing sustainability of public funding for HE Students: the public funds invested in SHIFT will be returned to the public sponsor at the end of the investment period
- the SHIFT Fund will also become a platform to establish virtuous Public Private Partnerships and attract private sector participation (financial intermediaries have the incentive to participate for outreach and marketing purposes; other companies may be enticed by the Corporate Social Responsibility aspects of participating in SHIFT)
- the main positive impact of SHIFT is in enhanced access to finance opportunities for HE students to fund their HE studies. SHIFT will unlock financial resources for students.
The transferability potential of the SHIFT model is high, as it ispoised to be adopted across diverse country and HEI settings.
Intellectual Output 3
Test and Validate the innovative financial model through Stress Testing
In Intellectual Output O3 the final SHIFT Model is tested and validated through financial stress testing. Partners will validate the final version of the SHIFT Model by defining a sound and tough stress test model.
The SHIFT Model is a reliable and self-sustainable funding model that can flexibly be adapted to different situations in different EU countries and will:
- ensure efficient use of public resources devoted to HE students
- guarantee sustainability of public finances devoted to HE
- attract private funding into a PPP model to support HE students in financing their education
- generate internal discipline mechanisms for the participants in the HE system: HEIs, financial intermediaries, public agencies
- facilitate HE students’ access to finance
- provide a platform for financial literacy and awareness for HE students
Elements of innovation
Intellectual Output 3 is innovative as it validates the innovative SHIFT Model based on the most reliable validation techniques for financial models. The innovation lies in the fact that such models do not currently exist.
The validation process will have a positive impact on the project as a whole, as it will allow partners to move into the production of Intellectual Output 4 “Implementation Package”.
Intellectual Output 3 is instrumental to demonstrate the robustness of the SHIFT Model and its sustainability.
The methodology for stress testing, its variables and assumptions are poised to be used in other contexts for the validation of future SHIFT Models, once the Intellectual Output 4 is completed.
Intellectual Output 4
Develop the SHIFT Implementation Package for its adoption in HEIs
Intellectual Output 4 is the complete toolbox for HEIs and stakeholders from HE and finance fields to use the SHIFT Innovative Model for HE students’ financial inclusion.
The Toolbox is directed to:
- HEIs, admission offices, students’ support offices and systems to promote HE students’ financial inclusion
- Students: O4 includes a “Financial Literacy” element to guide students through financial products and services, to make students aware of the products and consequences of financial decisions
- Local / national policy makers: the public sector has a significant role in promoting financial inclusion of HE students and in identifying innovative alternatives to common financial instruments that may remain inefficient or constrained by budget cuts
- Financial intermediaries: commercial banks, public banks, public financial intermediaries (savings and cooperative banks, credit unions, etc.) can take the SHIFT innovative model and implement it as part of their corporate mission (in the case of public entities) or as part of their Corporate Social Responsibility charter.
Elements of innovation
Intellectual Output 4 is innovative as it has the potential of enhancing HE students’ access to finance, of improving efficiency and sustainability of public investment in HE, and of mobilising private sector investment.
This output will produce impact on the different participants to HE Students Financial Inclusion, as follows:
- Users: HE students will be positively affected as more financial resources will be available to them through the SHIFT Model. The Financial Literacy element of Intellectual Output 4 provides information
and tools to increase awareness and reinforce the capacity of HE students to take informed financial decisions
- HEIs: HEIs will be able to provide additional services while safeguarding their budgets
- Public sector: SHIFT will positively impact public finances as it ensures the sustainability of public investment in HE students.
Thanks to Intellectual Output 4, participating HEIs will be able to implement the SHIFT Model. It will also allow other HEIs in different countries and settings to introduce the same efficiency gains: partners will make the SHIFT model available to all interested parties (financial intermediaries, other HEIs, public agencies, etc.) and stakeholders for its wider adoption across the HE European ecosystem.