How will State pay for the third-level funding crisis?

Analysis: Little appetite for student loan scheme in minority government

After eight years of spending cuts and rising student numbers, senior staff at universities and third-level colleges say funding shortages are reaching crisis levels.

The numbers going to third level are projected to grow by 30 per cent over the next decade or so. Colleges’ cost-cutting has largely been exhausted. Experts say an extra €1 billion is required just to keep pace with demand.

The central finding of the expert group on future third-level funding – to be published later today – is blunt: the contribution of higher education to Ireland’s economic and social development is now “severely threatened”.

“There are high non-completion rates in parts of the system, pressure on students and families to meet the €3,000 fee and living expenses, and a risk of social class gradient at post-graduate level,” the report states.


“Combined with this, the sector is facing increasing demand as the numbers of school leavers grow and lifelong learning expands.


"Ireland – as a society, a State and an economy that aspires to global competitiveness, high employment, social inclusion and quality public services – must address these pressures."

The status quo, the report makes clear, is not sustainable.

What is less clear, however, is where the additional funding that is needed is going to come from. The expert group report, chaired by former union leader Peter Cassells, presents three main options:


A State-funded system in which higher education is free and the student registration fee is abolished;


A considerable increase in State funding with retention of the existing €3,000 student contribution fee; and


An income-contingent student loan scheme where fees are deferred and State funding is increased.

These options would include greater State funding and a higher level of financing from industry. Most experts acknowledge that only one of these options – a student loan scheme – offers the most realistic chance of providing the kind of sustained funding needed in the medium term.

The problem is that, politically, it has little chance of flying. In a majority Government, Fine Gael – which has long advocated such an approach – might well have run with it.

However, Fianna Fáil has serious reservations about such a model. Sinn Féin is strongly opposed to it. In the age of "new politics", anything with a whiff of controversy has little or no chance of taking off.

The UK's experience of student loans – where college fees are ballooning and maintenance costs are now being rolled in with tuition fees – has attracted much negative press. Schemes in Australia and the Netherlands have, however, been fairer and gained public support. This leaves the option of a State-funded "free" system or modifying the current regime. Most economic experts say a return to this system is unlikely given the significant sums involved. It would involve the State's contribution to higher education leaping from 64 per cent to about 80 per cent.

Yet health, housing and public sector wage demands threaten to swallow up most of our available fiscal space.

Most realistic

This leaves the second option as the most realistic: additional State funding, while retaining the €3,000 registration charge for students. It may not please parents, policy

makers or university heads, but politically it is probably the safest and least controversial option.

The challenge will be to secure the kind of State funding that will lay the foundations for a thriving higher education system.

If anything, the pressure will grow. Irish universities have been sliding down the international rankings. The proportion of students to staff is one of the highest in Europe. There is little time to waste. Doing nothing is not an option.