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 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However, an unpublished Government report presented to Cabinet last year concedes that a further fee – above the €1,500 student service charge – would “raise affordability issues for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.

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.