Why a student loan system is the best way to fund third level

It’s time for politicians to make some difficult calls and get such a scheme up and running

With the CAO points published this week, many parents are preparing to send their children to third level for the first time. Along with the understandable parental pride, there’s equally understandable angst over the hefty expense involved.

The expected cost of financing a third-level student living at home is now just over €5,000 a year; double that if the student is living away from home. If they are studying in Dublin and need to rent in the midst of the current housing crisis, that bill will be significantly higher still.

In 1995 when the then minister for education, Niamh Bhreathnach, announced the abolition of annual fees, she said the aim was that “education will be seen as a right, not a privilege”. Yet the financial burden today is as onerous as it has ever been.

The question for the State is who should foot the bill for higher education. With the economic recovery well under way, it's time to tackle this thorny issue. An expert group led by Peter Cassells came up with some potential solutions three years ago. The options are still being mulled over by the Oireachtas Joint Committee on Education and Skills.


One is the introduction of a student loan system, with repayments by graduates to be contingent on their earned income.

A recent OECD study measuring the benefits of a third-level degree estimated that lifetime earnings for Irish graduates were boosted by about €320,000. It makes sense that those who benefit should pay back a relatively small proportion of their lifetime income in return.

A system where current upfront costs are replaced by a future-income-related loan scheme could also free resources for new access initiatives. This could improve the social mix in universities.

The Aviva survey shows many parents are in favour of a student loan scheme. And given the Government’s limited resources to increase exchequer funding for third level, a loan system is arguably the most practical and socially fair response to the issue. It’s time for politicians to make some difficult calls and get such a scheme up and running. We shouldn’t let another academic year pass by without addressing this issue.