European briefing | Balancing act: how will the ECJ resolve grant shopping?

In a world where higher education is more and more important, and where students are highly mobile, the ECJ has frequently had to consider questions concerning access to it - and, even more so, access to financial support for it - and its approach has gradually changed over time. Two recent decisions break no new ground but state the underlying principles with commendable clarity.

Prinz (Third Chamber, 18 July 2013) concerned German nationals who wished to receive grants from Germany for study at foreign universities. In each case the applicant only qualified for a one year grant because, when their course started, they had not been permanently resident in Germany for at least three years. Each challenged the legality of the three-year residence requirement as an interference with their rights of free movement, arguing that it was apt to dissuade an EU citizen from commencing studies in another member state, and the national court referred the question to the ECJ.

In Giersch (Fifth Chamber, 20 June 2013) the applicants lived with their parents, on whom they depended, in Belgium or Germany. The parents were long-time migrant workers in Luxembourg. Each applicant asked Luxembourg for financial assistance to attend university outside Luxembourg, which was refused because neither they nor their parents were permanently resident in Luxembourg. They alleged that this involved a breach of Article 7(2) of Regulation 1612/68 (now 492/2011) which guarantees social advantages for migrant workers.

Although the precise legal framework ?was different in each case, the essential question was the same: how far does EU law permit residence requirements to prevent 'grant shopping'?

Financial burden

Not surprisingly, therefore, the essential structure of the argument was the same in both cases. In Giersch the court identified the rule as one which carried a risk of indirect discrimination on ground of nationality, because non-nationals were more likely to be non-resident than nationals. In Prinz it identified the rule as one which might dissuade those who wished to study outside Germany, for fear of losing the training grant. Although these starting points (suspected indirect discrimination vs 'chilling' the exercise of free movement rights) are different, each ends up requiring the same question to be answered: does the measure pursue a legitimate objective in a proportionate way.

The government advanced similar justifications. Germany said that it was legitimate to avoid an 'unnecessary financial burden' by restricting grants to those who are able to demonstrate a 'sufficient degree of integration' into German society. The Luxembourg government put the argument in a more instrumental way: they wanted value for money by giving grants to people who were likely to make use of their expensive education for the benefit of Luxembourg. In both cases, the court accepted the justification as potentially valid - member states are allowed to restrict their grants to those who 'belong', and to prevent 'grant shopping'.