College expenses reach a new level

WHILE THE COST of sending a child to primary school is bad – and worse when it comes to secondary school – the expense associated with third-level education leaves both in the ha’penny place.

Putting a child through our “free” primary school costs about €12,000, while sending them to a “free” secondary school costs €13,000. Seeing a child through their third-level education, however, will cost more than €40,000 if he or she is living away from home, according to a survey from the Bank of Ireland.

That bank has been very active in the third-level student market this summer and has been busy doing deals with colleges to offer the parents of children attending third-level institutions and individuals who are doing postgrad courses loans which are cheap (well, cheaper).

The bank has agreed deals with more than a dozen third-level institutions to cover college registration fees. The loans for the annual €2,250 fee will be available to the parents of students from this autumn at a variable interest rate of 5.1 per cent, which applies for the duration of the course. Once the students graduate, a higher variable rate, which currently stands at 9.7 per cent, will apply to the remainder of the loan. Repayments are to be set at €100 per month.

The interest rate of 5.1 per cent represents a significant discount on normal rates, with loans of up to €5,000 currently subject to an interest rate of 14.02 per cent. In order to qualify for the loan, parents must meet the standard lending criteria, the bank says.

It has also launched a new postgraduate loan scheme which has been developed in conjunction with the Department of Education and Skills and the National Treasury Management Agency.

The postgraduate loans scheme will also be paid directly to the universities but will be taken out by the students. The loans will cover the full cost of course fees and an additional maintenance loan. They may also be available to those who received a maintenance grant as an undergraduate. The maintenance loan will be up to €2,000.

Repayments will be interest-only for the period of study and three months thereafter, at which point repayments will be capital and interest at 10.8 per cent APR variable. The repayment period can be up to five years.

While on the surface the loan schemes may look positive, they are not without their critics. The Union of Students in Ireland (USI) has warned that the postgraduate loans will increase educational inequities by making it more difficult for disadvantaged students to cover the cost of their studies.

“We are creating a two-tiered system whereby those with a decent credit history or with decent financial means can access postgrad education, but if you do not have that decent credit history, goodbye,” says USI president John Logue, who suggests that the Government is trying to use the loans as a replacement for a postgraduate grant system which was largely scrapped in the last budget.

Labour TD Joanna Tuffy also has concerns and believes the loan scheme could see a return to third-level fees. “University heads, collectively and individually, have been calling for a return of third-level fees for some years now. The heads of ITs have in contrast warned against the introduction of fees,” she says.

“This loan scheme is unique in that it relates to a particular charge – the student contribution charge. It is highly structured, and it could easily transfer to a hypothetical €5,000 third-level fee should fees be reintroduced. Is this an attempt to put pressure on the Government to introduce a full-blown fees and loan scheme, this being a ready made pilot scheme?”

She questions why colleges need to get involved in this loan scheme – “It’s not new banks giving loans to parents of students in terms of their overall costs” – and asks why universities don’t just allow students to pay their charge in instalments for those families that would benefit from this method of payment.

She points out that in order to qualify for the loan, parents must meet the standard lending criteria.

This, she says “suggests that those parents and students who really need loans because of existing family income pressures won’t get them, and families who don’t really need them could get €2,500 and use the freed-up cash flow for a holiday at a relatively low interest rate”.

She warns that the scheme could “drive a wedge between those who qualify for the loan scheme and those who don’t”. “What provision will the college make for those students whose parents don’t meet the lending criteria if it is so concerned about those families that are hard pressed?” she asks.

“Working-class families with no previous tradition of children going to college will be nervous of loans, compared to other families who have already borrowed to fund fees.”

She says the Bank of Ireland scheme is a “flawed initiative which does nothing to address the fundamental issue facing Government – funding higher education, especially undergraduate courses”.