Loan scheme to help students with €3,000 fees rejected by department

THE INTRODUCTION of any loan scheme to help students and parents cope with student fees of up to €3,000 from next September has…

THE INTRODUCTION of any loan scheme to help students and parents cope with student fees of up to €3,000 from next September has been ruled out by the Department of Education.

However, an unpublished Government report presented to Cabinet last year concedes that a further fee – above the €1,500 student service charge – would “raise affordability issues for some students”, especially given the lack of part-time work.

All students, new entrants and existing undergraduates, will be required to pay the student service charge and new student contribution fee, which will also be about €1,500.

The Government report on fees was prepared for former minister for education Batt O’Keeffe as he pushed for an Australian-style student loan scheme last year. But this proposal was vetoed by the Green Party in the revised programme for government.

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But the report concedes that higher student fees will have an impact on participation levels at third level. This , it says, raises “significant wider social and economic issues”.

The paper envisaged a student loan scheme where students would repay the cost of fees (€5,038 for arts and €7,284 for medicine) once they reach an income threshold of €18,000.

This week, senior officials have rejected a loan scheme because of the expense involved. The report envisaged that such a proposal would have substantial start-up costs of €75 million each year.

New student fees are expected to yield about €80 million annually from next September.

University presidents, who have been highlighting the financial crisis facing the sector, would like to see this new income ring-fenced for higher education. But sources say no such commitment can be given because of the fiscal crisis.

Government sources say a compelling case exists for additional third-level fees.

One senior source pointed to the continuing strong demand for fee-paying private education for 26,000 pupils.

He asked: “A huge number of parents can afford to pay €5,000 or more per year for private second-level education. Why should they not pay more at third level?”

Official figures show that in 2008, some 28 per cent of full-time undergraduates came from families with gross incomes of more than €80,000. Some 15 per cent came from families with a gross income of more than €100,000.

PAY AS YOU LEARN HOW LOANS COULD WORK

A REPORT prepared for theCabinet last year extolled the virtues of an Australian-style loan scheme to fund higher education. It also envisages fees pitched at €5,715 for arts and commerce and €7,272 for nursing and engineering.

These fees – plus the €1,500 student service charge – would be lent to students. As a result , higher education would be “free” at the point of entry.

Repayments on the student loan would amount to 9 per cent of gross earning for all graduates earning over €18,300.

It would take graduates about 10 years to repay the loan. The report says teachers with an arts degree would face a debt of more than €21,000; engineering graduates would have debts of €31,000 and nurses would have debts of over €23,000. The loan scheme, while costing €75 million a year initially, could yield up to €380 million in revenue.