Grant for individuals

Definition and description

Grant is a public funding (subsidy) to support individual’s investment in education and training.

Schemes providing contributions to the individual costs of continuing (vocational) education and training sail under a broad variety of names (“Voucher”, “Grant”, “individual learning account”, “premium”, “allowance”). However, the names are typically used in an arbitrary way and do not reveal any specificities of the type of support provided.

Grant and voucher schemes can be differentiated as follows:

• Cost-related support - provides a specified share of the eligible costs of education and training up to a defined maximum, typically, covering only direct costs as fees or further costs directly incurred due to participation as travel costs or costs for learning material.
• Lump-sum support - provides a lump sum (typically related to a period of participation e.g. per month or semester), however, not related to the incurred costs of education and training. The lump sum may be foreseen for covering the direct costs of education and training (e.g. fees) only or supporting both the direct costs and the living costs during participation.

Lump-sum support schemes are often used for supporting the living costs during participation in education and training, as the latter cannot be delineated in any detailed way. Moreover, vouchers (in particular vouchers representing a small value) are partly constructed as lump sum support, e.g. when beneficiaries receive a voucher worth EUR 100 and no further needs to contribute to the costs of education and training are established (see for example UK#214).

Cost-related support is mainly provided in order to contribute to the direct costs of education and training. For example, an individual may receive contributions to the fees of a course in the value of EUR 2 800, in line with the specifications of the schemes (50% up to a ceiling EUR 500 of public contribution), so receiving EUR 500 in this case. 

Furthermore, it is of importance, whether support is provided as a

• Prepayment, so that the beneficiary need not to pay in advance and the amount due is covered by the public source. Vouchers representing a particular value of money are a key example of instruments used for prepayment. For example, a voucher worth EUR 500 and the set conditions that the beneficiary need to contribute 20% of the fees might be used to pay for fees of EUR 400, with EUR 320 paid by the voucher and EUR 80 paid by the participant.
• Reimbursement, where the beneficiary needs to cover 100% of the costs first, however, receives the contributions to the costs of education and training later, e.g. after providing an evidence of enrolment or the relevant invoices of eligible costs.

By offering prepayment, schemes help to overcome liquidity constraints of beneficiaries. Moreover, it can be more motivating if the need of advance payment of the training costs can be avoided by a voucher. However, prepayment can involve substantial administrative costs and legal challenges for the providing organisation, e.g. the organisation issuing the vouchers. For example, it is often difficult to predict the proportion of vouchers issued actually being used, however, public administrations need to earmark the budget for promises being made in the past and often cannot reuse the money otherwise as long as the vouchers are formally valid. Moreover, prepayments are considered as more prone to fraud and can involve more difficulties in withdrawing support provided based on false/fraudulent statements.

In reality, schemes may combine lump sum and cost related approaches. Occasionally, they may provide some payments in advance and some only after completion of the training[1].