Student loans and graduate taxes will lead to an exodus

The recent furore over the drop in rankings for Irish universities has drawn increased attention to the sector, but for entirely the wrong reasons.

Parents and students should not take this decline in rankings seriously. First, the rankings are based on specific and skewed methods and are particularly inappropriate in assessing standards at undergraduate level. Second, more than 17,000 colleges are ranked worldwide, and the new figures show all Irish universities are in the top 2.5 per cent.

The rankings system and the real world do coincide in just one area: in addressing the level of staff-to-student ratios. These ratios soared by 30 per cent from 1:18 in 2008 to 1:24 in 2011, and may now be closer to 1:27. This problem has one specific cause: lack of funding. Between 2008 and 2012, recurrent grant allocations to universities and colleges fell 25 per cent. In 2012, the public spend per student in higher education fell below that for second level for the first time ever.

Ireland’s status as one of the best-educated societies in Europe is increasingly threatened, not by statistics from a rankings calculator but by plain old financial starvation.

Funding proposal

A radical new approach is required. In a submission to the working group on funding in higher education, the Irish Federation of University Teachers proposes that a set percentage of corporate tax be ringfenced for the sector.

The federation believes that a working group comprising Revenue, the Department of Finance and the third-level sector should urgently address the rollout of such a scheme.

A report by the University and College Union in the UK has proposed raising corporation tax there to the average for G7 countries, enabling abolition of university fees. The move would leave the UK’s main corporation tax below that of France, Japan and the US.

Ireland’s higher education system is already highly reliant on non-State funding. The fact that certain universities emphasise fundraising skills as much as teaching or research excellence when hiring and promoting academic staff illustrates the extent of the malaise.

In some universities more than 50 per cent of finance already derives from research- related investment, philanthropy and income from student registration and fees. The increasing reliance on student fees risks jeopardising the increased participation that is required both for equality of opportunity and the needs of business. A 2011 study in the UK found a £1,000 increase in fees slashed participation by 3.9 per cent. Fee hikes reduced part-time student numbers in English universities from 25,900 in 2010 to just 13,900 today.

German model

More tellingly, in 2006, German federal states began introducing third-level fees. By the end of this year this policy will have been totally abandoned and no state will retain fees.

Student loans and graduate taxes have superficial appeal but do we really need yet more incentives for graduates to move abroad and stay there?

In Australia, the government plans to increase interest on student loans to commercial rates. The National Tertiary Education Union says these changes will mean that a loan “now paid off in 10 years . . . will take over 23 years and will include an extra $24,000 in interest”.

According to the University and Colleges Union, loan contract changes in England mean that, whereas “most graduates hoped to pay off debts by their late 30s, future students will continue paying until their early 50s”.

Some initiatives, such as private investment and philanthropy, have potential as ancillary solutions. These sources are, however, variable from year to year and the donor makes the decision on funding.

Designating a set percentage of corporate tax for education would ensure adequate investment that meets the needs of education and business, is transparent and does not impinge on academic standards or independent research.

Mike Jennings is general secretary of the Irish Federation of University Teachers