COLLEGE GRADUATES would have to repay a debt of at least €21,000 under the proposed loan scheme being considered by Government, according to a confidential report prepared for the Cabinet.
The report, seen by
The Irish Times
, was circulated to Cabinet members earlier this week by Minister for Education Batt O’Keeffe .
While the 110-page report lists five possible options for a new system of student contributions, the Minister has signalled his support for an Australian-style student loan scheme.
The report to Cabinet envisages that repayments on the student loan will amount to 9 per cent of gross earning for all graduates earning over €18,300. On average, it will take graduates 10 years to repay the loan.
It also envisages fees pitched at €5,715 for arts and commerce and €7,272 for nursing and engineering.
The report says teachers with an arts degree would face a debt of over €21,000. Engineering graduates would have debts of €31,000 and nurses would have debts of over €23,000 at the point of graduation.
The loans advanced to student to pay fees could be repayable – possibly through the taxation system – once they have reached an income threshold after graduation. Sources stress that the income threshold may be higher than the €18,300 used for illustrative purposes in the report.
The other main features of the report include:
- The loan scheme, while costing €75 million per year initially, could yield up to €380 million in revenue once fully operational;
- Discussions have already taken place with the National Treasury Management Agency and Revenue about their possible role in the operation of the student loan scheme;
- The student registration charge – currently averaging about €1,500 – could be absorbed into the loan, leaving students with no "up front" payments; higher education would become "free" at the point of use for the individual student.
- Part-time students, who currently pay full fees, could secure the student loans;
- Discounts would be given to student who pay off the debt before it is due and possibly for those who pay fee charges up front;
- An interest rate of 3 per cent could apply to the debt;
- Increased emigration will increase the risk that "some element of student loans will not be repaid".
Mr O’Keeffe will take sounding from Cabinet members before making a recommendation, probably in September. The report says the earnings of those in higher education – before the current recession – were 84 per cent higher than those with only second-level education. It says the Government – in bearing the cost of fees – is transferring a substantial benefit to third-level students. “It is reasonable that the students would make some contribution in return for this anticipated benefit,” it concludes.
The report sets out the pros and cons of six policy options, including a return to up front fees and a combination of loans and fees.
It acknowledges that the student loan system could lower participation by some poorer groups. But it also says the loan system would see “higher education becoming ‘free’ at the point of use for the individual student”.
It concludes: “Student loans do not of themselves end issues of under-representation in higher education but they contribute by removing the upfront costs as a barrier to higher education . . . and they ensure that only graduates who have reached and stay above certain income levels are obliged to repay the loans.
The report says the current high dependency of the third-level colleges is unsustainable. This dependence must be reviewed, it says, if Ireland’s higher education system is “to develop and meet future demands in the context of increasingly tight public resources”.