The European Commission presented its reform strategy to boost graduate numbers, improve teaching quality and maximise what higher education can do to help the EU economy emerge stronger from the crisis. It proposed, among the EU-level initiatives, including a multi-dimensional university ranking and an 'Erasmus for Masters' loan guarantee scheme for students taking a full degree course abroad.

The Commission's reform strategy has been shaped by analysis, studies and consultations with higher education institutions, teachers, researchers, students, businesses, trade unions, governments and international bodies. In addition, in a Commission's report recently published, Europe urgently needs to address the social dimension of higher education more forcefully and coherently, particularly in view of the economic downturn.

In this strategy the Commission identified some priority areas in which further reforms are needed such as increasing the number of graduates, attracting a broader cross-section of society into higher education, and reducing the numbers who drop out without completing their courses; improving the quality and relevance of higher education, so curricula meet the needs of individuals, the labour market and the careers of the future, as well as stimulating and rewarding excellence in teaching and research; providing more opportunities for students to gain additional skills through study or training abroad, and to encourage cross-border co-operation to boost higher education performance; training more researchers to prepare the ground for the industries of tomorrow; strengthening the links between education, research and business to promote excellence and innovation; and ensuring that funding is efficient – freeing up higher education governance and investing in quality education to match labour market needs.

Although many EU countries are prioritising the modernisation of their higher education systems, the potential of European higher education institutions to contribute to Europe's prosperity and fulfil their wider role in society remains underexploited. Currently, higher education is not performing well enough to provide Europe with enough people with the right kinds of skills to create jobs and growth. And worldwide, Europe's competitors, especially the emerging economies, are rapidly increasing their investment in higher education. This is why education is at the heart of the Europe 2020 strategy, which has set a target for 40% of Europe's young people to have a higher education qualification by the end of this decade (33.6% in 2010).