The Government is considering a reduction in the €3,000 student contribution charge as part of a new funding package for the third level sector due to be published next month.
It is also examining a major expansion of student grants which would result in more families being entitled to free fees and maintenance grants.
The plan forms part of a wider set of policies to be published next month based partly on a report into the future funding of third level conducted by the European Commission.
This report is understood to estimate that core funding of between €350 and €400 million is needed for higher education, over and above existing levels of funding.
Government sources have ruled out a student loan scheme to provide this additional funding and are in favour of increased State contributions.
Politically, the move to consider a cut in student contributions is attractive to the Government, which is struggling to compete with Sinn Féin to attract younger voters.
Sinn Féin, for example, has previously pledged that in Government it would cut the student contribution by at least €500 each year, with the eventual aim of abolishing charges altogether.
Official figures show it would cost the Government about €40 million to cut the student contribution charge by €500, and just over €80 million to cut it by €1,000. The cost of abolishing the charge altogether would be €245 million.
A combination of rising living costs and continuing rent hikes has put the plight of students more prominently on the political agenda, according to informed sources.
‘Highest third level charges’
In addition, since the UK's departure from the European Union, Ireland now has the highest third level charges in Europe.
However, just under half of undergraduate students do not pay student contribution charges as they are entitled to Susi (Student Universal Support Ireland) grants.
A review of the student support scheme, to be published next month, is understood to recommend lowering income thresholds to give more students access to these grants .
This review will be accompanied by proposals on the overall cost of third level for students.
Latest research by TU Dublin, for example, indicates that the cost of living for students living away from home has jumped from just under €12,000 to almost €14,000 in the space of a year.
The move to provide a sustainable funding base for third level, meanwhile, comes amid warnings from universities over a crisis facing the sector.
European Commission research is understood to confirm that the sector is relatively underfunded compared to other third level systems in Europe.
Jim Miley of the Irish Universities Association said investment in both the talent and innovation needs of the country will be fundamental to a successful national recovery now and into the future.
“We’ve consistently sought meaningful and sustainable solutions for a system which is significantly underfunded,” he said.
A spokeswoman for Simon Harris said the Minister briefed colleagues at the Cabinet committee on economic recovery on the European Commission review of third level funding.
She said the committee agreed with his proposal that student loans should not be further pursued as a viable option for a sustainable future funding system for higher education.
“It has also been acknowledged that the report will recommend the need for an increase in core funding to achieve a sustainable system, which will need to be addressed through the Exchequer and through the Budget.” she said.
The spokeswoman added that Mr Harris will engage with Minister for Public Expenditure Michael McGrath with a view to bringing proposals on future funding of higher education, alongside reform measures, in January.
She said this will be accompanied by proposals on the cost of third level for the student and will be guided by the report on the student support scheme.