Calling for renewed investment in and immediate action on the underfunding of higher education in Ireland, today’s publication of the higher education funding working group report puts forward three different models for the future funding of the higher education sector, including a mostly state-funded system and a system with the current student contribution charge and increased state funding.
This new funding model would support an increase in core funding to €600 million by 2021 and €1 billion by 2030 as well as €5.5 billion investment in capital funding over next 15 years and an extra €100 million investment to “deliver a more efficient system of student financial aid”. The cost of these new investments would be covered by the chosen funding model.
Media reports, however, appear to suggest that the third option, a loan student scheme, option is the one preferred by the report.
With the decision on how the sector will be funded still to be made by an Oireachtas committee, and with the sector remaining dangerously low on funds in the meantime, here’s everything you need to know about the loan proposal contained in today’s report.
What’s going on today? Are student loans going to be introduced?
Despite some misleading headlines, and despite the fact that it has been main subject of many articles that have been popped up today, there is no confirmation, or even convincing indications, contained within the report itself that student loans will be introduced. Today’s publication of the higher education funding working group’s report actually put forward three recommended options for the future funding of higher education in Ireland – a sector which has become increasingly and dangerously underfunded.
Only one of these options is a student loan system, and, despite early speculation that there would be a lot of emphasis put on such a system, the report weighs up all three options and doesn’t put a strong emphasis on any.
How likely is a student loan system, then?
It’s hard to know, as the publication of the report doesn’t mean that any decisions are going to be made immediately. The report is going to be given to the Oireachtas Committee on Education and Skills, which is made up of members of Labour, Fianna Fáil, the Green Party and Sinn Féin. As The University Times has pointed out before, for those opposed to a loan system this is good news – all parties, except Fine Gael, promised to reduce or abolish the student contribution, with Sinn Féin even pledging to abolish it altogether.
John Walshe writes in the Irish Independent that, with the committee chaired by a Fianna Fáil TD, the decision has the potential to become a test of politics and of this new government, rather than a true debate about protecting our education system.
And, as Niall Murray points out in the Irish Examiner, attempts to reintroduce any kind of student-fee scheme over the years have failed due to being blocked by other parties. There’s potential for this to become an internal political squabble, rather than something that achieves the best for higher education.
Of course, it seems that earlier versions of the draft report did put particular emphasis on a loan scheme, but that has since changed. From here on, it is the seven-person committee – and maybe some senators yet to be appointed – that we’ll be waiting on.
What is the support for them like?
A coalition between the Union of Students (USI) in Ireland and the four largest trade unions in higher education was formed in June to campaign for a properly state-funded system and against student loans.
In theory, members of all major political parties bar Fine Gael should oppose an increase, given their pre-general election promises. In the run up to the general election, Fianna Fáil committed to freezing the student contribution charge at €3,000 for five years, with Labour pledging a €500 reduction. The Social Democrats pledged to reduce it by €1,000 over the course of a Dáil term, and Sinn Féin pledged to actually eliminate fees over the course of a Dáil term. Fine Gael did not make any commitments, stating instead that they would wait for the report, leaving their stance on current proposals ambiguous, though a draft of their education manifesto suggested that they were happy to move ahead with this loan-scheme proposal.
However, the electorate is not likely to hold the breaking of such promises against them, particularly given how the parties can justify their actions by claiming it’s a position recommended by an expert group. Increased state investment in the sector is not as tempting to the average taxpayer as a system where students take on the financial burden themselves. Party stances on higher education was simply not an issue for the public during the general election, and knowledge of the funding crisis is not widespread.
Indeed, writing in the Irish Independent today, Prendergast addressed this lack of knowledge: “Unfortunately, because universities have put their best foot forward to attract foreign students, there is still a perception that the sector has escaped the worst of the funding cuts. Unfortunately the opposite is true – they have had the worst cuts”.
Given the state of the sector, any solution that can plug the funding gap will be warmly welcomed by many. This seems to be the position taken by Prendergast, who wrote in his article today that the sector “is on the threshold of a disastrous drop in quality”, and, with student loans: “Once the debt is reasonable, I think it is a fair system.”
What are the alternatives?
The report states the group’s belief that there are only three models that would be sufficient to address the funding gap and to support the new investment that the sector urgently need.
The two other options represent a significant increase in the funding that the state would give to higher education. The first would see a system that’s mostly state-funded, with the abolition of the student contribution for first-time EU students. For this system, that would be 80 per cent funded by the state, the report estimates that the state would have to pay an extra €1.3 billion a year by 2030. This option, modelled off the Nordic model, is favoured by most student groups and trade unions.
The other option would see the student contribution frozen at €3,000 a year and more state funding given, with the state paying €1 billion a year.
In contrast the loan system would would see the state invest between €1,307 million and €1,1557 million per year in 2030 as a core grant, depending on level of deferred payment, as well as another indirect cost of between €150 million and €190 million.
How would a loan scheme work?
The loan scheme would be income-contingent, which means that students would only pay their fee back once they begin to earn above a certain amount. Education would be free at the point of entry, with no upfront fee. The level and duration of repayment would also depend on your income. The option of paying fees upfront would also be offered.
The report recommends that the fee be increased above the current €3,000, but urges that the fee “remains moderate”, similar to the Australian model. It recommends that an independent agency has the responsibility of regulating the fee levels, and that the scheme be extended to postgraduate students, and that repayments would be collected through the tax system.
Various reports have stated that this figure will be increased by between €4,000 and €5,000, though this figure is only offered as an example within the report.
What would be the problems with the scheme?
The report notes the implications the scheme would have on public finances, due to factors like loans not being repaid, and that the government would have to raise “significant monies” to fund the system.
However, by 2030 the scheme would cost significantly less per year than the other two proposals and it is expected that there would ultimately be net savings to public finances.
Recognising the difficulty in calculating the costs to public finances, the report provides a range of cost estimates and different fee scenarios – leaving the specifics of pricing that would come with such a scheme unclear for now.
It also notes how such a scheme may be seen as an “unfair change” and how there might be “possible debt aversion among some income groups”. The tendency of Irish students to emigrate is noted as a “significant” but not “insurmountable” obstacle.
How soon will a decision be made?
Speaking today on RTE Morning Ireland, Bruton stated that a decision on the model to be pursued will be taken “within a year”. The history of the report casts some doubt on this clarity, however.
The publication of the report was already delayed for six months, originally supposed to have been published in December 2015. This was something heavily criticised back in May by USI and trade unions, who then called for the immediate publication of the report. It’s also the second report of its kind, with a similar report advocating for the introduction of a published in 2012 and then dismissed by then-Minister for Education and Skills, Ruairí Quinn, who commissioned the report. With the HEA now to conduct a review of funding based on a recommendation within the report, decisions look set to be further pushed back.
The funding crisis is a long-running one, and there still seems to be little public and political appetite to do something about it.
