The student grants controversy rumbles on.
With the risk of restating the obvious, the introduction of an asset test is proposed.
This isn’t the first time that an asset test has been considered.
In fact, it has been suggested on and off over the past 30 years.
However, this is the first Government that seems set to bite the bullet.
There seems to be some validation for the proposed asset test following the report from the Strategy Group entitled National Strategy for Higher Education to 2030, the so-called Hunt report.
One of the findings from the report was that, “The State invests considerable public funding in means-tested student grants for approximately 40% of all fulltime students.
“However, the absence of any consideration of assets and wealth in the means test model has limited the scope of the State to target these scarce resources”.
Emotion should be extracted from the argument, and the facts should be looked at in the cold light of day. There is no doubt that there are some successful farmers who earn incomes above the average industrial wage. But the reality on the ground, backed up by the CSO and the Teagasc national farm survey, is that farm incomes are on average much lower than the average industrial wage.
The current income test goes a long way towards establishing whether the recipient of a grant has the financial ability to support themselves in third level.
At a basic level, a student of a family with income less than €55,920 in 2011 can qualify for a partial grant, and a family with income of less than €41,110 can qualify for a full grant.
Full details of qualifying criteria and grant levels are available at the www.studentfinance.ie website.
An asset test makes sense — after all, those who can afford to pay should pay.
At an extreme, take for example an individual with €1m in the bank. Currently this person’s child can qualify for a full rate grant, assuming that the interest earned on the savings is less than €41,110.
On the capital asset test, farmers would be disproportionately affected, given that they own the assets which generate their income — unlike employees.
The issue with the proposal to bring in an asset test is that the farmer with, say 100 acres worth €1m, could be put on the same par as the individual with €1m in the bank. At a very basic level, the farmer isn’t going to have liquidity. In other words, the farmer may be worth a lot, but it’s not readily accessible.
Many farmers do not see their farm as an asset, just like a home-owner doesn’t regard his or her home as an asset which he can sell to subsidise his or her child’s college fees.
For anyone who suggests that a farmer could sell a few acres, that would make about as much sense as suggesting that a homeowner could sell a room in their house, or a piece of their garden.
For many farmers, their farm is the source of their livelihood, which in many instances has been passed down over a series of generations. In the unwritten code of rural Ireland, the farm is ultimately only under the care of the current generation of farmers, with a view to passing it on again to the next.
The current grant scheme looks at one year only. For young students attending college in 2012, the income of their parents in 2011 is assessed.
If the student qualifies for a grant in 2012, then the grant will roll on for successive years. However, the recipient of the grant should notify the awarding authority if the income increases in future years.
Previously it was suggested that some farmers “manipulated their income”. This is simply not plausible, the assessment is based on returns submitted to the Revenue Commissioners, the accounts are prepared in the vast majority of cases by accountants who are governed by ethical standards and who must prepare accounts in accordance with financial reporting standards.
If this were the crux of the issue then I don’t think there is any objection to taking an average over an average of a number of years.
What leaves me a bit cynical about the proposals is that there doesn’t seem to be any follow-through on the basis for the recommendations in the Hunt report.
In other words, the proposals seem to be about cutting the numbers qualifying for the grant, as opposed to redistributing the current level of grant funding.
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