Public funding accounts for 85% of all funding of Higher Education in EU (Eurydice); the economic crisis leads governments to cut public expenditures; education is among the first sectors to fall victim of budget cuts. The EU in “Modernisation of Higher Education in Europe: Funding and Social Dimension” clearly summarizes this trend: “the economic downturn led to a decrease in public funding, while demand for higher education continues to increase”. The EU also states that students pay the price: “financial burden is increasingly being shifted to students”; hence the immediate need to address financing of HE for students: “subsequent social challenges need to be offset” (Modernisation of HE in EU). Financial inclusion of HE students to fund their education is hence an utmost priority for EU: such priority is recognised by Erasmus+ Horizontal Priority 6, p 121 of Programme Guide: “Sustainable investment, performance and efficiency in education”. SHIFT will develop a model able to attract private actors and capital. In addition, SHIFT is a “priority topic” as it is an innovative approach to increase efficiency of public expenditure and investment in education, including new funding models such as public-private partnerships. Against this background, SHIFT has the objective of alleviating the financial burden of access to and participation in HE of students while increasing the efficiency of public spending in HE by developing an innovative model of virtuous Public Private Partnership based on a financial instrument and model (mix of endowment fund and investment fund) that will generate increased financial resources to be distributed as grants, matching grants and soft loans for HE students. SHIFT is a new funding model that pools financial resources from both the public and private sectors, serving the dual purpose of 1. increasing efficiency of public expenditure: SHIFT enhances sustainability of public resources by generating additional funding opportunities for scholarships of university students. The public funds allocated into the SHIFT model (the endowment fund) will be invested (through the investment fund) and only the profits generated will be disbursed (through grants and soft loans) to students, hence keeping intact the capital (here the sustainability of the public funds) 2. mobilising private resources: SHIFT establishes a virtuous mechanism of public and private partnership. Not only SHIFT pools funds from public and private sectors, but also will consolidate public and private attitudes towards facilitating access to finance for HE students. SHIFT brings together 7 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: 1. Map Financing Dynamics of HE 2. Develop the SHIFT Innovative Financial Model 3. Test and Validate through Stress Testing the innovative financial model 4. 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 main results are: a) 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) b) 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 systemic level for the HE system across EU: the innovative financial model will bring about threefold impact: 1. increased financial resources to enhance HE access and participation 2. improved sustainability of public resources for HE 3. 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 has achieved the objectives set out in the submitted proposal. All partners have actively contributed to the Intellectual Outputsof the project, carrying out activities according to the agreed plan and as outlined in the proposal. The main results of the project are the 4 intellectual outputs, available at https://www.project-shift.eu/results/. As can be seen from the documents: 1. IO1: as reported in the executive summary, this IO has identified specific drivers and inhibitors of current funding models for HE students to provide elements for the design of the innovative model. In particular, the partners have investigated students’ access to finance and financial literacy across the EU, emphasizing the rigidities in availability of the direct (loans and grants) and indirect (tax allowances, family benefits) schemes for students and discerning the government initiatives in EU countries to increase the level of financial literacy. Furthermore, the partners have examined the private and public expenditure by EU countries to finance higher education and highlights the shortcomings of the current funding policies. Key data sources, which have been extensively used in desk research, include OECD, Eurostat, Eurydice, Bank of Italy, Polish Ministry of Science and Higher Education, Sutton Trust, among many others. The partners identified via surveys the most significant barriers to enter higher education in selected Member States. In Italy, SHIFT partners ran the questionnaire-based survey in the period between 27 February and 15 March 2018 by using online survey tools or mailing hard copies directly to students and obtained 1,067 replies, 804 of which have been properly completed. In Poland, SHIFT partners conducted a survey between January and mid-February 2018, using both on-line and off-line data collection methods. The questionnaire has been sent to students at both public and private universities across different cities in Poland and in total 342 completed surveys have been collected, 132 of which are via an online tool. In the UK, SHIFT partners carried out a student survey for England, which collected 144 responses, and a survey for Wales, which collected 121 responses. Additionally, HE alumni participated in an opinion survey carried out by SHIFT partners in England and Wales, which covered 34 respondents. 2. IO2: this output developed the SHIFT model on the basis of the results of IO1. The first chapter of the report has focused on the role of Public-Private Partnership models (and potential pitfalls), focussing on the EU and the partner countries (Belgium, Italy, Poland and the United Kingdom). The second chapter describes the main features of the SHIFT model, and in particular, it discusses the benefits to potential participants, the funding model, and the determinants of the choice of the financial tool. The third chapter discusses corporate governance issues and puts forward a governance model for SHIFT. The fourth chapter discusses the application process through which students would be selected for funding and how SHIFT would support the financial literacy of the students participating in the programme. The fifth chapter discusses how the SHIFT fund would be setup and other related operational issues. 3. IO3: the Partners have developed a framework that aims to allow the potential sponsors of the SHIFT project to understand whether the project is feasible, what risks the project would be subject to, and how to address such risks. The central focus of this Output is to provide a quantitative evaluation of the potential ability of the SHIFT investment fund to generate returns that can be used to provide students with either grants or loans. In particular, the partners collected data on fund management fees in the EU and data on the proxies for the different components of the SHIFT portfolio (equity and bonds) to examine the sensitivity of the SHIFT portfolio returns (net of fund management fees) to changes in stock market returns and interest rates. Moreover, a simulation of the performance of the SHIFT portfolio under three difference scenarios is provided: a “normal”, a “boom” and a “recession” scenario. The Partners also considered the potential demand risks on the success of the SHIFT project. 4. IO4: this IO aims to make the SHIFT model operational. The results of this IO have been disseminated at the link https://www.project-shift.eu/tool-box/. This link summarises the project and provides guidelines for its implementation. The website also provide template documents for internal documentation for the SHIFT Model (e.g. Memorandum of Understanding), and a set lecture slides that addresses important financial literacy issues for students that would be enrolled in the program (Module 1: Managing money as a student; Module 2: Understanding retail banking, financial products and markets; Module 3: Protecting your money).