Students’ union warns loan scheme may spark fee hike

Student loan schemes organised at a number of colleges could encourage the Government to increase fees, students’ representatives have warned.

The Union of Students in Ireland is also concerned about small print that means any future increases in the student contribution will not be covered by the Bank of Ireland loans, although they do offer favourable interest rates for students’ parents during the study period.

The registration fee is currently set at €2,250 but Education Minister Ruairi Quinn has indicated it will almost certainly rise to €3,000 in the next few years. Over half of all third-level undergraduates are liable for the charge.

Bank of Ireland and Trinity College Dublin announced the first loan scheme a month ago, allowing parents borrow up to €9,000 for a typical four-year degree. The loan allows for repayments of €100 a month for the duration of study at a 5.1% variable rate, rising to the bank’s standard graduate rate of 9.7% variable for another three years.

Following announcements of separate loan schemes with the bank at other colleges since then, USI president John Logue said USI is worried about the long-term effects.

“The scheme could lead to a steep increase in fees, as it gives the Government the impression that finance is available to cope with such increases. If this were to occur, it would not be long before we find ourselves in a comparable situation to the United States, where graduates are burdened with massive debt upon leaving college because they have to take out ever-more-onerous loans to pay for steep increases in fees.”

Announcing details of the latest scheme at NUI Galway this week, BoI regional manager Donal Flynn said it is proud to be able to deliver meaningful products and services to students. “We are very conscious that in the current economic climate, Ireland’s future generation of employees need initiatives such as this to enable them upskill for a changed environment.”

Mr Logue said that rather than loans from a private bank, there is no public option and the Government is unlikely to be able to offer one before the bailout agreement ends in 2018. “This leaves six years for Ireland’s third-level students to become indebted to a finance programme that is privately run and profit-driven.”