Loans and top-up charges could solve funding issue

Imposing third- level fees alone could be problematic. But there may be a better way

GIVEN the importance of higher education for our prosperity, it is surprising that government investment has failed to keep pace with the growth in student numbers and international comparators. Earlier this year, UCD President Dr Hugh Brady and Trinity College Provost Dr John Hegarty highlighted the need for increased investment to meet the challenges ahead. Our growing economic vulnerability reinforces the presidents' case.

It is clear that the parlous state of the country's finances requires corrective action. However, the current "blunt instrument" approach to cutbacks has the potential to do lasting damage to both our university system and our overall economic competitiveness.

The alternative is to develop a rational plan for higher-education investment: one which combines a continuing efficiency drive with increased investment to deliver a competitive, world-class, student experience. The question is: how should the plan be paid for?

Funding of higher education by the general public makes sense up to a point, given its importance to society and the economy. However, it is also true that individuals with higher-education qualifications have higher lifetime earnings and score better on many other indicators of socio-economic advantage. The universities' experience of increasing participation among disadvantaged groups shows that, once the right supports are in place, such learners can be attracted and succeed. However, these efforts are resource- intensive. Currently, no dedicated funding of any substance is provided to achieve the stated Government objective of reaching a higher education participation rate of 72 per cent by 2020.

The squeeze on funding in the past decade has meant crumbling infrastructure, larger class sizes and growing underprovision of basic services such as student counselling and libraries. The current overdependence of the universities on Exchequer funding has compromised the quality of the student experience and constrained the ambitions of the institutions with regard to access.

It would appear there is little appetite for providing the funding to properly resource our universities from increased general taxation. And there are good arguments against this approach, given its regressive nature - all pay but not all benefit equally.

There has been much public debate about the possible return of university fees. The university heads have carefully weighed up the pros and cons of the various approaches and believe that a replication of the previous fees regime would be wrong. The Minister for Education and Science has rightly commented on the need to ensure that any new fees system should not damage the prospects of access for the less well-off. It has been suggested that a high income threshold should be set, focusing on the "wealthy".

Just who the "wealthy" are is open to debate, however. The generation of high levels of income from a fees system could require a relatively low parental income threshold. Alternatively, if the threshold were set higher, it could extract unrealistically punitive fee levels from the smaller base of parents targeted. This would likely accelerate the migration of Irish students abroad: already, some 10,000 undergraduates are attracted to UK universities.

An alternative to fees alone is a combination of income contingent loans and top-up fees. By supplementing an appropriate level of Exchequer provision, this has the potential to allow us build a system which delivers both quality and equity.

The essence of this approach is that institutions charge top-up fees which supplement the Exchequer provision, but all students have the option of taking out a loan to cover the cost incurred. Repayment of the loan does not fall due until the student has finished college, is in employment, and has exceeded a defined income threshold.

This approach has a number of advantages. Most significantly, there is no up-front financial obligation, while and subsequent repayment of any debt takes account of the ability to pay. In addition, the provision of loans shifts the focus of funding away from parents towards the individual student who reaps the rewards of their education.

Todays students tend to be older entering college, have a wider breadth of life experience and are generally much more independent than they were a generation ago. As a result, they are better placed to share in decision-making about how education is funded.

In the view of the university presidents, there is a cogent argument in favour of the combined systems of top-up fees and income- contingent loans to supplement appropriate levels of State funding. In this way, we can equitably share the costs between society as a whole and those who benefit directly. It will place more explicit value on the educational experience and drive up quality in the system.

Significant work and public consultation will be needed before the new system can be implemented. This work should be done as part of the much needed Higher Education strategy process. In the meantime, we need to chart a rational course through the current funding difficulties. This requires dialogue and a shared sense of purpose on the part of Government and the sector, not indiscriminate cutbacks. Our knowledge capital is too valuable and too important for our future to jeopardise in this way.

• Ned Costello is the chief executive of the Irish Universities Association