Student loans repaid after entering workforce ‘feasible’

Student loans which can be repaid after entering the workforce are “entirely feasible” and would lead to a “substantial increase” in higher education funding.

Student loans repaid after entering workforce ‘feasible’

That is according to Dr Aedín Doris of Maynooth University and Dr Darragh Flannery of the University of Limerick. They were appearing before the Joint Oireachtas Committee on Education and were responding to a research paper by Dr Charles Larkin of Trinity College and Dr Shaen Corbett of DCU who argued against the introduction of an income-contingent loan system (ICLs). They argued that it would cost the exchequer €10bn over 12 years before repayments helped stabilise the system.

Dr Flannery said there were “serious shortcomings” in the methodology used by Dr Larkin and Dr Corbett in their modelling of ICLs, while Dr Doris said an ICL system would result in a major boost to higher education funding without reducing access.

“Our conclusion is that an ICL would allow a substantial increase in HE funding without reducing access and at a lower cost to the exchequer compared to other alternatives. The resulting savings can then be used to improve funding for earlier education, from preschool through to secondary school, which is where the main barriers to participation in higher education lie,” said Dr Doris.

Dr Larkin and Dr Corbett also appeared at the committee and reiterated their view that such a scheme required further research to test potential side-effects, arguing that the goal was an education system not a banking or a lending system.

The idea of loans was one of three options on funding higher education which was set out in a separate report for the Department of Education last year by Peter Cassells. The alternatives were “free fees” and keeping the €3,000 registration fee.

Students have warned that the proposed ICL scheme for college and university courses would spark a new emigration brain drain.

The Union of Students of Ireland (USI) said it rejects the idea student loans are an effective way to fund the sector.

It said such a scheme would be expensive to set up, would spur on a new surge in emigration, and disproportionately punish public-sector employees and workers outside the highest earning professions.

Annie Hoey, president of the USI, said repayments of a reported €150 a month are “simply out of touch with the reality of graduate salaries in Ireland”.

“A loan scheme is likely to spur an increase in emigration from the country to avoid debt repayment, with significant economic, skills, and social consequences,” she said.

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