It’s only an educated guess as to who will pay for third level

Attempts to reintroduce any kind of student fee scheme have failed for over a decade.

€500m a year less is being spent on universities and colleges, though there are more students, and nobody wants to foot the bill, says Niall Murray

THERE is €500m less of taxpayers’ money being spent on third-level education than eight years ago, and 2,000 fewer staff work with thousands of more students.

But the public will be slow to approve more of their money, either in taxes or in fees from students. They perceive large levels of waste in universities, and institutes of tehcnology, which still receive €1bn a year in public funding.

That is the amount they receive from the Department of Education, via the Higher Education Authority, to cover students’ tuition, pay, and other costs. But it is far from enough.

The trouble is that the significance of the shortfall is not a big concern to citizens.

It did not feature much, if any, in debate ahead of February’s general election. Even if it was not mentioned on the doorsteps, there is evidence for the Government elsewhere.

To assist the work of the Peter Cassells-chaired expert group on future funding of higher education, the Department of Education paid €25,000 for a study of public attitudes.

Although only 80 people were interviewed, Amárach Research starkly concluded that people were not too much upset about the funding collapse. Even when the figures are spelled-out, Irish people believe waste and inefficiency should be sorted out, instead of them having to spend more money.

That is why, this morning, you will hear about Education Minister Richard Bruton’s targets for improved outcomes in how colleges cater to socially-disadvantaged communities, by helping people get into work and by aiding those already in work to improve their qualifications.

The reason he needs to do so is to set the context for a likely heated political and public debate around two simple questions: Who should pay for higher education in Ireland? And how much should be paid?

Education Minister Richard Bruton
Education Minister Richard Bruton

There is little secret that all the focus will be on the option put forward in the Cassells report (published by Mr Bruton this morning) to introduce an income-contingent student-loan system.

Students would have their tuition fees — maximum amounts likely to be set by yet another new regulator — paid by the State in the form of a loan. However, they would have to commit to repaying the amount after they reach a certain earning threshold — unless their families can pay up-front.

It might sound a reasonable idea to study now and pay later, in return for the salary benefits associated with having a higher qualification. After all, Ireland has one of the most highly-educated, young-adult populations in the EU.

READ MORE: New student fees loan scheme up for debate

But attempts to reintroduce any kind of student-fee scheme have failed miserably for over a decade. Noel Dempsey was knocked back by Fianna Fáil and Progressive Democrat colleagues in the cabinet, in 2004, and Batt O’Keeffe’s short spell at the Department of Education also saw work begin on designing a loan scheme.

The Cassells report will set out the justification for any increased demands on students, taxpayers or businesses, highlighting the likely growth in student numbers and the investment needed just to maintain current standards.

Noel Dempsey
Noel Dempsey

The risks of further reputational damage to Ireland Inc, through falling quality of higher education, will also be flagged. Universities, and others in higher education, say such falls are impending, but know, in reality, that they set in years ago, because of the pressure to do more with less.

And then the tough part: The question of how to redress the imbalance. And it might not be students alone who would have to cough up.

The main, overriding options are threefold, but could include some combination of two or all of them.

There is the possibility of fully state-funded higher education. Based on a system like Norway’s, this would inevitably require an increase in general taxation, which is not a likely runner for a government that will be teetering on a possible election, after next autumn’s budget.

Another option considered by the Cassells group is a larger contribution from business, through an increase in employer PRSI. Already, 0.7% of this charge goes into a national training fund levy that mainly supports courses for the unemployed, but an additional charge could be ringfenced to promote progress from further education to third-level.

The aforementioned income-contingent loan scheme will probably be put forward as the fairest way of getting the balance right, but even if there were broad public or political support, there would be complications in how to set it up and run it.

While Nama has been consulted about managing a student-loan scheme, it is legally bound to act commercially.

It is also unclear what kind of public investment would cover all students’ fees, how such a fund could be raised, or over what period repayments would match loans paid on behalf of students. This would depend on whether or not loans were income-contingent, meaning repayments would only begin after a graduate started earning over a pre-determined figure.

Another consideration for the Cassells group has been whether a maintenance element would also be the subject of loans, or whether grants would continue to be paid for students from lower-income homes.

The fact that students from lower-income backgrounds are more likely to avoid taking on loan debts could be a challenge to the logic of using any scheme to improve social equality. There would also likely be no impediment to better-off families paying fees up-front.

It’s only an educated guess as to who will pay for third level

The international models likely to be cited include the Netherlands, where student-loan repayments can be collected from people living abroad. While the risk of a brain drain, as graduates potentially emigrate to avoid loan repayments, has been raised, financial modelling by the Cassells group takes account of potential default for these, and other, circumstances.

Whatever way you look at it, some group in society is going to have to reach deep into their pockets.

And the Government will be keenly aware, having yet to try and ride out the political nightmare of water charges, of the political fallout of doing that.

READ MORE: Richard Bruton prepares for tuition fees backlash


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