Financial Constraints and University Attendance in Europe: can Financial Institutions Lend a Hand?

This paper considers how university costs play a role in affecting higher education attendance in the European context, and what role private financial institutions can play in easing cost burdens for families. We begin by asking whether tuition or related costs are a limiting factor for European students, in particular those from less wealthy families. We provide evidence that in Europe the largest financial barrier to university is housing as few countries charge a meaningful tuition and many provide progressive income supports. We then consider the potential role that private financial institutions can play, drawing on research from the US, UK, and other European contexts, focusing on two mechanisms: loans and savings accounts. Prior research suggests that private loans have shown varying effectiveness, largely in the US context, and come with meaningful risks for families and lenders. We propose the development of a youth educational savings vehicle has fewer downside risks, noting prior efforts have demonstrated that effective schemes are difficult to design. We consider how these hurdles could be overcome and conclude with what a product would look like in the Italian context, including simulations of account balances and costs.