Financing Bologna Students’ Mobility

The current system for financing cross-border students, based on the host country, is neither sustainable nor efficient: it produces too little cross-border education. On that background, and motivate as well by a recent decision of the European Court of Justice, we explore two alternative solutions. The first one substitutes to the financing by the host country, a financing by the country of origin, through vouchers that the student may use at home or abroad provided it is in a recognized institution. The second one, potentially an efficient design, combines that substitution with a reimbursement of education costs through interjurisdictional transfers or the change of vouchers into contingent loans. At the end we also explore the case of differentiated tuition fees, a solution however inconsistent with present rules of the European Union. JEL: I22, I23, H77 Keywords: Bologna process, Higher Education, Contingent loan, Bhagwati tax.