College fees - what's going on?
Students – and their parents – have spent the past few months worrying about the re-introduction of college fees. So what is the Minister planning, and what will it mean for you?
Speculation about the return of third-level fees has been continuing for months. When will we know the Government’s proposals?
Minister for Education Batt O’Keeffe will bring his recommended proposals to Cabinet shortly.
So, are fees coming back?
What we can say is that the era of free third-level education is coming to an end.
Some other elements are clear. There will be a new system of graduate taxes and/or student loans. The new fees regime will begin in September 2010, and it will only apply to new entrants to college next year. Existing undergraduate students can breath easy.
But, even at this 11th hour, there is still confusion about the remainder of the Minister’s plans.
What’s the problem? O’Keeffe says the rich should pay fees. Why doesn’t he press on?
The Minister is trying to square a very difficult circle.
He wants to generate new funds for the debt-ridden third-level sector, but he also wants to protect those on lower and middle incomes.
O’Keeffe has openly acknowledged there is only so much pain the average family can bear. Translation? You cannot impose fees of more than €5,000 per year on families already struggling with pay cuts or pension levies, the possible abolition of the PRSI ceiling and higher taxes in next week’s Budget.
The Minister says his proposals will have to be “family-proofed’’. He will need to look at the overall impact of his proposals on average families.
Minister O’Keeffe is offering other reassurance. Last week he said that “a key consideration from my perspective will be that any scheme implemented does not place an unfair burden on students or their families or act as a disincentive to participation in higher education by those from less well-off backgrounds.’’
That all sounds like good news. What you are saying is that only the rich will be asked to pay up. An average middle income family – a teacher married to a Garda, say – will not be hit with fees?
Now we are getting to the crux of the whole issue.
The Minister has won plaudits for putting the fees issue back on the agenda. But the real challenge is to win Cabinet backing for his proposals.
The rumpus over medical cards for the over-70s has sent a shiver down the collective spine of the Cabinet. Ministers want to avoid another own goal.
A return to fees has the potential to unleash another firestorm unless the proposals are seen as fair and equitable.
There is another factor. With the forthcoming local and European elections less than 10 weeks away. O’Keeffe’s ministerial colleagues are understandably nervous about a harsh new fees regime.
All very interesting but could you please answer the question: will families on average income have to budget for college fees?
As O’Keeffe has still to finalise his proposals, there can be no definitive answer here. What we can say is that a return to the old fees regime in which the vast majority had to pay up looks less likely.
The Minister’s guiding principle is this; those who can afford fees should pay up. He has pointed to a Bank of Ireland wealth survey detailing the existence of some 33,000 millionaires in the State.
If Batt O’Keeffe sticks to this principle, those with high total household income
would be asked to pay fees. Charges would range from €5,000 for a general Arts degree up to €10,000 for courses which are more expensive for colleges to run, such as medicine.
So, only the rich will take the pain?
The main thrust of the proposals could be an Australian-style graduate tax. Essentially, students repay the cost of their higher education once their income reaches a certain threshold.
From the Government’s perspective, this scheme has clear benefits. Essentially, it shifts the onus of payment away from parents and towards students themselves. It also delays the pain for several years.
The downside is that it will be 2013 at the earliest before a graduate tax scheme delivers any revenue.
In order to bring in some money, the Government is likely to offer discounts for students (or their parents) who pay the fees up front. For example, a medical undergraduate facing €50,000 in fees over five years might get a 40 per cent discount by paying up front.
Good news if you have wealthy parents who can stump up the cash; less good if you are not so well off. To soften the blow, some kind of low-interest loan arrangement may also emerge.
To summarise, then, third-level fees for the rich and a new tax/loan system for students? Will this solve the funding crisis at third level?
That looks like the favoured policy mix at the moment. As for the funding crisis, the new arrangements should over time provide a new sustainable financial framework for the colleges, but they will remain desperately underfunded (compared to British and US colleges) in the short term.
Minister for Education Batt O’Keeffe hopes his proposals will have a long-term positive impact on higher education without imposing undue pain on the average worker. That, at least, is the plan.
FEES: The UK model
The UK model varies from country to country. The Welsh and Scottish systems differ slightly from the English system, which is described here.
Third -level institutions in England can charge fees up to a maximum of £3,145 (€3,389) this year. Although they can choose the level of the fees, most institutions opted to charge the maximum amount.
How do they pay for those fees?
All students are eligible for a tuition fee loan up to the maximum tuition amount for each year they study. This loan is not means- tested. Most students will also avail of a means-tested maintenance loan of up to £6,475 (€6,978) per year, depending on where they go to third level.
A central body, the Student Loans Company (SLC), administers all government-funded loans and grants to students throughout the UK. Interest is charged at the rate of inflation, meaning that the amount repaid is worth the same as the amount borrowed, and the money does not have to be paid back until the graduate is earning a certain income.
What is the average debt when students graduate?
The annual student debt survey by push.co.uk stated that this years cohort of third-level entrants in the UK could expect to owe an average of £20,000 (€21,555) by graduation.