Better Late Or Never: Is A Student Loan Scheme Really Too Slow To Fix Our Third Level Crisis?

Recently, the Irish Times said that a new report showed an income contingent loan (ICL) scheme for higher education in Ireland was unworkable. The report was funded by the Technological Higher Education Association, representing the institutes of technology in the Republic and involved a detailed cost/benefits analysis by Trinity College and DCU professors.

According to the analysis, the scheme would not work in Ireland which they say is neither big enough nor small enough to support the model, which is used in the UK and the Netherlands.

The ICL model is one of the options being considered as a replacement for the free fees initiative which the government says is not sustainable with current growth. As a replacement for government paying the full bill, it might seem odd to say the delayed payment of loans (effectively charging people for something currently given away free) is too expensive.

But how much does third level currently cost the government currently, and how would this be affected by the introduction of student loans?

In 2014, there were 173,224 students enrolled in universities, colleges and institutes of technology.

Fees for third level education, where a student isn’t eligible for free fees, (such as when repeating a year, or pursuing a second degree) vary by course and college. For example, the B.A. in Journalism in DCU would cost an EU student €6,679 per year. In DIT, the equivalent course (B.A. in Journalism) would cost €819 per year, although you’d be paying it for longer, as it’s four years to DCU’s three. (These numbers don’t include the universal student contribution of €3,000).

One potential result of the introduction of student loans could be a reshuffling of students into richer and poorer universities and IT’s- for example, instead of being sorted into courses according to academic achievement or points, students from poorer backgrounds might shun the universities and prestigious colleges in favour of cheaper options.

While supporters of the loans say poorer students would benefit from more financial supports, an economic reshuffle might be a few steps backwards for an integrated Irish society.

The Journal published a figure for average yearly tuition for undergraduate students in a public university in Ireland: $3,885 or around €3,648. Add this to the student contribution, and students would be liable for an average €6,648 per year. For a three-year course, this adds up to nearly €20,000 per undergraduate- before rental costs, books, travel, or other costs of study are taken into account. Add a Master’s on top of a four year course and students could be looking at debt in excess of €30,000 to be paid back over years.

The cost per year to the government- assuming a student loan scheme would lend students their student contribution and tuition until they begin to earn above a certain wage- would be €1,151, 593, 152. (1.15 billion). That’s without adjusting for any increases to tuition which might accompany the loans.

Now, look at the report by Trinity researcher Charles Larkin and DCU professor Shaen Corbet, which says an income contingent loan system would cost €10 billion over twelve years before it stabilised through repayments. If a year’s cost is €1.15 billion, then any scenario where government pays the brunt of the costs will cost something similar until enough graduates hit minimum pay levels. This is not a new or additional cost- this is what government currently pays for many students.

Of course, not all students will ever reach minimum pay levels and pay off their loans. Some will drop out of college, some will emigrate, and presumably the recent report has taken all these into account. The Financial Times in 2016 reported that two thirds of UK students will never pay off their student loans, which means that the scheme would rely heavily on the remaining third.

Currently, the government does not foot the bill for student contributions, unless the student is in receipt of a SUSI grant. In 2014, SUSI awarded 74,000 grants- meaning government were already paying for these student contributions. That leaves 99,224 which were paid by students, a small contribution to the total cost of education, and if the UK figure of two thirds abandoning and one third paying back their loans holds true in Ireland, not worth clinging to over the eventual repayment of the one third’s tuition costs.

DCU President Brian MacCraith has previously said he supported an ICL model, as did his predecessor. In articles for DCU and Trinity student newspapers he said that countries with these models have seen increased attendance by lower-income students, but critics from institutes of technology say the study-now pay-later plans could be prohibitive to those with poorer backgrounds.

Student Loan
DCU President Brian MacCraith

The recent report which says ICLs wouldn’t work was sponsored by a body representing institutes of technology- who don’t want the loans.

Understandably, many parents, students and students’ unions don’t welcome the loan scheme either, not when it’s compared to the current free fees scheme. But if free is not an option, there are limited alternative sources to fund Ireland’s third level education. One other solution is to take money from industry- but this raises concerns that third-level would be increasingly tailored towards what industry wants and gaps in the labour market, as opposed to educating people and training future thinkers and leaders.

John Tillson, a former DCU student with a PhD in Philosophy of Education who now lectures at Warwick University, says student loans in the UK enable people to access education and don’t affect those who don’t make enough money.

Dr Tillson said that where free education is no longer an option, ICLs are a reasonable solution, and fairer than increased taxation.

Unless you want to provide free education only for the poor, this seems like an okay enabler, if not leveller.” He said, “The idea that it will take forever to pay itself off is only sensible if the alternative is to shut down education”.

The authors of the report were unavailable for comment for this article.

Ciara Del Grosso Bates

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