Student loans will not be introduced to bridge third-level funding gap

Student loans will not play a role in the future funding of higher education in the State, the Government is to announce on Wednesday.

Ministers gave formal approval at Tuesday’s Cabinet meeting to a plan from Minister for Higher Education Simon Harris to seek an alternative means of funding the sector in future.

Mr Harris is to outline his plans in a policy paper, Funding the Future, which he is to announce later today. The Minister is to say that he instead intends to commit to an approach supported through additional exchequer investment and employer contributions through the National Training Fund.

The policy paper also proposes that the cost of attending third level for students should be lowered.

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An upshot will be that student contributions, currently capped at €3,000 per year, will be gradually reduced, according to the Minister. There was no detail last night on the scale of the reductions and over what time period these would be implemented.

The decision not to use student loans essentially confirms the long-held view of Mr Harris and many Cabinet colleagues that Ireland should not follow the path of other countries – particularly Britain – where they have become the norm.

Demographic costs

A core funding gap of €307 million has been identified in the higher education sector at present, but additional funding will also be required for future demographic growth as well as to cover the costs of new policy proposals.

In setting out the policy, Mr Harris will argue that cost cannot be a barrier to accessing education.

“It is my firm intention to take the pressure off families and listen to the calls of our younger generations,” he will say. “Measures to reduce the cost of education through changes to the Student Grant Scheme and the student contribution will be on the table for the coming budgets.”

This policy is being announced in response to two independent reports on the sector – a European Commission report into funding higher education and an independent review of the student grant scheme.

Some of the additional core funding of €307 million will be used in the short term to provide additional places for medical students. In the longer term, funding will be increased to meet the demands posed by demographic changes and to bring about reforms required in the sector.