Students could face average €20k debt under new proposal

Students could be hit with average debts of €20,000 after graduating under proposals to impose deferred fees through income-contingent loans

Deferred student loans are one of three models suggested to help resolve the funding crisis in third-level education.

While the Cassells report, published yesterday, provides options of a predominately state-funded system, and another system which would remain almost the same as is currently in place with €3,000 student fees, it also highlights the massive funding deficit in third level.

The chairman of the expert group, Peter Cassells, said “the status quo and the funding model we have at the moment is not an option. It will condemn our children for the future to a system that has been deteriorating.

“We need again to have very significant investment in education to meet the jobs, the social services, health, education, housing that we require.”

Mr Cassells warned that politicians should not “squabble” over the options laid down in the report.

The long-awaited Cassells report highlights the major funding gaps at third level, with €5.5bn needed over the next 15 years for ongoing maintenance, equipment renewals, and capital upgrades.

Mr Cassells said at least €1bn of annual funding must be pumped into the system by 2030 to cater for increasing student numbers, with €600m needed annually before 2021.

A further €100m is needed to deliver a “more effective system” of student financial aid, the report states.

Education Minister Richard Bruton said the report would be considered by the Oireachtas committee on education and skills and that cross-party consensus would have to be reached on a funding model.

He said it would take a number of years to introduce the deferred loan system if this is the chosen option.

“You don’t pay anything at the point of doing the study and you don’t pay anything until you had completed your studies and your income went over a certain figure,” said Mr Bruton.

“So you would only be beginning to incur the liability over time, in the meantime the State will have to come up with upfront funding. So it’s quite a complex piece.”

Fianna Fáil’s spokesman on education, Thomas Byrne, said the report highlighted the stark funding crisis at third level.

“These institutions have been struggling to do more with less in recent years, but it’s clear that the current situation is unsustainable. Demographic pressures will see the number of students in higher education grow by at least 25% by 2028,” said Ms Byrne.

“We will evaluate the proposals put forward by the Cassells group, but in general the public costs of an income contingent student loan scheme are extremely uncertain.”

Three funding models under review

The Cassells report has recommended three different third-level funding models, all include increased State funding; however, the amount students would have to pay varies:

  • 1. A predominately State-funded system

The State would significantly increase its core grant to institutions and the €3,000 undergraduate student contribution would be axed. The report also allows for widening this to include free tuition for postgraduate education.

Under this system around 80% of costs would be funded by the State with much of the balance coming from an increased National Training Fund levy which is paid by employers.

  • 2. Increased State funding with continuing student fees

The current €3,000 student fee would remain as would post-graduate fees. However, there would also be a considerable increase in funding from the State. Fee waivers would continue through the student grant system.

  • 3. Increased State funding with deferred payment of fees though income contingent loans

The current student registration fee would be abolished and instead a deferred loan system would be introduced. Repayment of loans would only begin once a graduate’s earning reaches a threshold level which would have to be decided but is expected to be around €26,000. Based on estimates given in the report, students would have to pay between €16,000 and €20,000 to complete a four-year degree. Longer courses, such as veterinary or medicine, would cost more.

The level of loan repayment would also be based on the graduate’s income and unemployment or illness would also be taken into account.

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