Funding crisis in higher education must be tackled

Combination of state investment and graduate fees is the way forward, says Ibec chief

Thirty years after the abolition of college tuition fees, just one in seven young people in the country’s most disadvantaged areas progress to higher education.

In our most affluent suburbs, almost every young person (99 per cent) has this opportunity.

This fact seems to have been the lost in the predictable outpouring of rhetoric around the fairness and equity of college fees and loans which has greeted the report from the Expert Group on Future funding for Higher Education (the Cassells Report).

The report itself has highlighted the scale of the funding crisis in higher education which will only get worse with growing numbers of students. Poor education outcomes, overcrowded lecture halls and labs, deteriorating facilities and high student dropout rates will have severe economic and social consequences.


It sets out three funding options which could deliver the necessary investment to address this challenge: a predominantly state-funded system, retention of the current upfront fee of €3,000 or deferred payment of fees through an income contingent loan system.

All three options envisage increased state investment ranging from an additional €1.3 billion for a state-funded system to €563 million for a deferred fee payment system.

State investment

The first two options are not economically sustainable or socially desirable. Yet, student groups and some politicians have lined up to oppose fees without telling us which public services they would cut or which taxes they would increase to fund higher education. As the the Higher Education Authority’s participation rates demonstrate, their arguments around the likely impact on lower income families aren’t any more credible.

Our starting point should be that every student who has the ability and motivation to avail of a college education should be able to do so, whatever their personal circumstances. But if we are serious about educational disadvantage, we should target state investment in areas such as early childhood education which will increase likelihood of young people in disadvantaged areas taking up this opportunity. And then we should provide the grants and support services to ensure that they stay the course as students.

The second option of retaining the existing €3,000 upfront student charge is basically accepting the status quo, which the Cassells report itself warns is completely incompatible with our national ambitions and will condemn Ireland to become an education and research backwater.

This option also ignores the undoubted pressure on many students and families to come up with a large upfront payment. They have got the worst of both worlds; fees without the support structure to pay them. Meanwhile Ireland’s reputation for having one of the best educated workforces in the world becomes increasingly threatened.

The third option under which graduates would pay tuition fees when their earnings reach a certain level is the only equitable and sustainable option. There are many elements of this option that have to be worked out: how the level at which the fees in the future will be set being the most obvious (the Cassells report models two options of €4,000 and €5,000 per annum).

It would be economically foolish and socially unacceptable to saddle a generation of young people with the scale of debt that we see in the US and will probably see in the UK.

Therefore we need a balanced, fair and sustainable system that combines adequate state investment with an affordable student contribution.

Role of business

Business is also willing to play its part. Employers already pay more than €360 million a year into the National Training Fund (NTF) through a payroll levy and individual companies contribute directly to higher education institutions through a broad range of up-skilling, research and sponsorship initiatives. A more structured approach to supporting programmes in areas of skills demand, and more effective use of the NTF can be explored.

The Cassells report is being debated by the Oireachtas education committee. However, the Minister for Education has said the committee will need to "build consensus" on a plan.

This does not bode well for the implementation of a clear funding strategy that will deliver a robust and steady base of funding to sustain the system into the future.

Undoubtedly there are difficult political decisions to be made, but the time for debating the student fee issue has long passed. Twelve years ago the OECD advised the Irish government that it was impossible to have quality higher education by predominantly relying on State funding.

At that time, it suggested the introduction of an income contingent student loan system. The basis for this recommendation has not changed.

Failure to invest now in third level will place an entire generation of students and the future of this country at a serious disadvantage. Danny McCoy is chief executive of employers' group Ibec