Request for €1m grant to match inflation refused

STUDENTS have less spending power this year because the Department of Finance turned down Education Minister Mary Hanafin’s request for just over €1 million to offer grant increases to match rising inflation, the Irish

The minister announced last July that the ordinary maintenance grant, payable to around 45,000 grant recipients, would rise by 3% to just over €3,100 for the current academic year.

But documents obtained under the Freedom of Information Act show that she asked the Department of Finance to approve a 3.9% increase.

In a six-page proposal from the Department of Education’s student support unit to the Department of Finance on June 16 last, Ms Hanafin’s officials cited her concerns that the increased rate of inflation was likely “to significantly worsen the value of the grants for those who need them most in the academic year 2006/’07”.

The correspondence between the two departments also reveals that it would have cost taxpayers just 1.35m more to bring the increases in line with the 3.9% inflation rate at the time, a figure which had risen from 2.5% the previous December.

But in its final approval letter to Department of Education secretary general Brigid McManus on July 27, the Department of Finance only gave a 3% increase.

It described this as a once-off concession “in view of the recent acceleration of inflation”, having initially suggested a 2.5% rise.

The rate of inflation has not fallen since then and reached a three-year high of 4.5% in August and peaked at 4.9% last month, it emerged last week.

In other words, the cost of living is rising by one-and-a-half times the rate of the grant increase for most students in the past year.

The Union of Students in Ireland (USI) said there has been a clear reduction in the value of the ordinary maintenance grant.

“The top level doesn’t even cover half the €6,000-plus cost of living for a college year, and it’s worse again that it hasn’t increased in real terms year-on-year,” said USI welfare officer Kelly Mackey.

“This is a time of year when we often see the effects, as extra costs like books for new course modules and exam fees become too much, forcing many students to drop out because of the financial pressure,” she said. The Department of Education did, however, succeed in securing a higher-than-normal increase of 5.3% in the income thresholds for qualifying students, in an effort to stop the apparent drop in numbers who are eligible for the grants in recent years.

“The Minister [Ms Hanafin] is also concerned that the apparent less-than-expected impact of our annual increases in the income thresholds may account, in part, for the flat performance in the participation rates of persons from the non-manual socio-economic group between 1998 and 2004,” Department of Education principal officer Pat Dowling wrote on June 16.

A 22% increase in the highest level of grant to almost €6,000 for around 13,000 students from the poorest backgrounds brings the estimated cost of all increases to €36m this year.