EUR 100 million for Student Loan Scheme in Hungary
The European Investment Bank (EIB) has today signed a EUR 100 million loan with the Student Loan Centre (Diákhitel Központ) in Hungary to be channeled into loans financing costs incurred by students pursuing undergraduate and graduate degrees at Hungarian Higher Education institutions.
The Diákhitel Központ's Student Loan Scheme provides financial aid to eligible undergraduate and graduate HE students regardless of social or educational background. This is of particular significance in Hungary whose Higher Education structure has undergone massive transformation in recent years. Undergraduate and graduate numbers have more then doubled over the past decade, reflecting the evolution from an elite to inclusive system.
The EIB loan may cover part of new student loans in the academic years 2005/2006 (autumn semester), 2006/2007 and 2007/2008. EIB considers the role of the scheme is set to grow in the near future as government budgets in Hungary face heightened constrictions and students increasingly rely on additional financial resources.
The loan was signed by EIB's Vice-President Wolfgang Roth and Diakhitel's CEO Tamás Csillag. It will be the first EIB loan operation with Diákhitel Központ and is viewed as an important pioneer project in educational funding for the EIB in general and in the new EU Member States in particular.
EIB Vice-President Wolfgang Roth made it clear that without the support of the higher education sector, the Lisbon Agenda could not regain momentum. Education, research and innovation, he said, are crucial to sustained economic growth and employment.
The Bank's involvement in this project is significant as it contributes towards a more balanced as well as more diversified funding profile of the Hungarian Student Loan System. In addition EIB's loan offers Diakhitel Központ longer maturities than available to the company to date as well as the option to draw local currency. Diákhitel Központ, a non-profit organization, expects to enhance it borrowing profile in the markets and to reduce the impact of earlier short-term interest hikes on its borrowing and lending activities.
Owned by the 25 Member States, the EIB acts as the European Union's long-term financing arm, supporting the policies of the Union. Providing financial support to this project highlights the EIB's commitment to the Innovation 2010 Initiative (i2i) in support of the Lisbon Strategy, aimed at building a knowledge-based European economy. Improved education and training has significant positive effects on a country's long-term growth prospects, fostering the creation of employment, growth and social cohesion.
Under i2i the EIB plans to lend up to EUR 50 billion for RDI projects by the end of the decade. Since the initiative's launch in 2000, the Bank has financed projects under i2i in the EU-25 to the tune of EUR 24.1 billion. In 2004 alone, the Bank financed some 60 i2i projects for a total of EUR 7 billion in the EU-25.