Luxembourg Can’t Keep Higher Ed Aid for Its Own

     (CN) – A Luxembourg law barring nonresidents from receiving financial aid for higher education violates a basic rights treaty, the EU’s highest court ruled Thursday.
     The tiny European nation currently hands out grants and loans as a way to promote college among younger citizens.
     Luxembourgers and other Europeans residing there at the time they begin their studies qualify for the financial aid package, and may use the funds to pay for their studies in any EU state.
     It withholds such aid, however, from the children of cross-border workers whose parents work in Luxembourg but live in the bordering states of Belgium, France and Germany.
     The European Commission brought an action against Luxembourg in 2011, and the following year issued its preliminary opinion that the financial aid practices discriminate against migrant workers in violation of EU law.
     Meanwhile, four children whose parents work in Luxembourg but live outside its borders sued after officials rejected their 2010-11 financial aid applications on residency grounds. By the end of that school year, more than 600 other students had filed similar actions against the Luxembourg government in the nation’s administrative tribunal, claiming disparate treatment and discrimination.
     For its part, Luxembourg argued that its financial aid package does not constitute a “social advantage” under EU law. The government argued that its objective – an educated population with 40 percent possessing college degrees by 2020 – requires restricting the benefits to citizens and residents only. Such claims seem to echo the state’s motto, “We want to remain what we are.”
     Luxembourg had also argued that its residency requirement ensured that students with no link to Luxembourg society whatsoever could not receive financial aid and study anywhere in the world. Such a practice would lead to “study grant forum shopping” that its national budget cannot sustain, officials said.
     The administrative tribunal rejected a portion of Luxembourg’s argument and acknowledged that financial aid is a social advantage. It also threw out opposing claims that the policy constitutes direct discrimination, but it asked the Court of Justice of the European Union whether the legitimate national aim of a more highly educated society and budget constraints justifies indirect discrimination.
     The Court of Justice – also based in Luxembourg – applauded the nation’s goal of more college graduates, but rejected its fear of negative budgetary impacts. Luxembourg has a population of 524,000 and a per capita GDP of $107,000, the highest in the world.
     “To accept that budgetary considerations may justify a difference in treatment between migrant workers and national workers would imply that the application and the scope of a rule of European Union law as fundamental as the principle of non-discrimination on grounds of nationality might vary in time and place according to the state of the public finances of the member states,” the justices wrote.
     Luxembourg’s argument that the children of migrant workers have no ties to its society and are unlikely to return to Luxembourg after college also fell flat with the EU high court.
     “The court has already held that migrant and frontier workers, since they have participated in the labor market of a member state, have in principle created a sufficient link of integration with the society of that state, allowing them to benefit from the principle of equal treatment, as compared, respectively with national workers and resident workers,” the justices wrote, citing the 2012 decision Caves Krier Freres. “The link of integration arises from the fact that, through the taxes which they pay in the host member state by virtue of their employment there, migrant and frontier workers also contribute to the financing of the social policies of that state.”
     The court continued: “Admittedly, students who are resident in Luxembourg when they are about to embark on their higher education studies may be more likely than non-resident students to settle in Luxembourg and become integrated in the Luxembourg labor market after completing their studies, even if those studies were undertaken abroad. It must therefore be held that the condition of residence provided for under the [financial aid policy] is appropriate for attaining the objective of promoting higher education and of significantly increasing the proportion of Luxembourg residents who hold a higher education degree. It remains however necessary to determine whether that condition does not go beyond what is necessary to attain that objective.”
     Rather than apply a broad-brush policy that is “too exclusive in nature,” the high court advised Luxembourg lawmakers to apply less restrictive conditions to the financial aid packages that will still help the country achieve its aims.
     “Where the aid granted consists of a loan, a system of financing which made the grant of that loan, or even the outstanding balance thereof, or its non-reimbursement, conditional on the student who receives it returning to Luxembourg after his or her studies abroad in order to work and reside there, could attain the objective pursued, without adversely affecting the children of frontier workers,” the decision states. “In addition, the risk of duplication with equivalent financial aid paid in the member state in which the student resides, with or without his parents, could be avoided by taking that aid into account in the grant of the aid paid by the State of the Grand Duchy of Luxembourg.”
     “Above all, in order to avoid the risk of ‘study grant forum shopping’ referred to by all the governments which submitted observations to the court, and to ensure that the frontier worker who is a taxpayer and who makes social security contributions in Luxembourg has a sufficient link with Luxembourg society, the financial aid could be made conditional on the frontier worker – the parent of the student who does not reside in Luxembourg – having worked in that member state for a certain minimum period of time,” they added. “In another context, [EU law] provides that … the host member state is not to be obliged to grant maintenance aid for studies before the acquisition of a right of permanent residence which is subject to a condition of residence of five years in the territory of the member state concerned.”

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