ANALYSIS:Report avoids specific recommendations
THE REPORT on possible future student contributions presents a series of options to Cabinet Ministers.
The report, a hugely impressive research work, was prepared by senior Department of Education officials in conjunction with the Higher Education Authority.
It scrupulously avoids making any recommendation, but Minister for Education Batt O’Keeffe has signalled support for the Australian-style student loan scheme (option 3 below).
The report explores what it calls the “pros and cons” of five options. The following are edited versions of the various options as presented to Ministers.
Option 0: No change to current arrangements
Pros:No immediate implementation issues.
Cons:A continued high level of dependence by the third-level system on exchequer. This would raise questions about the sustainability of the system and its potential for future development.
Option 1: Combination of student grants and fees – no State-provided loan facility
Pros:Administratively simple, immediate revenues maximised as fees paid upfront.
Cons:Affordability issues for middle income groups; detrimental impact on participation and very high financial cost for those just above grant eligibility threshold.
Option 2: Combination of student grants, free fees and fees
Pros:Impact on affordability can be minimised by confining fees to higher income groups.
Cons:The limitations on additional revenue generated; significant administrative costs with huge means-testing system.
The report says the return of fees for those with family incomes over €60,000 would generate additional revenue of €128 million. A threshold of €80,000 would generate €79 million. A threshold of €100,000 would generate €42 million and one of €120,000 would generate just €23 million.
Option 3: Introduction of fees based on student loan facility
Pros:Higher education free for students at point of use (€1,500 student registration charge included in loan); future revenues enhanced by making all students liable on the basis of future income. Can become self-financing over longer term. Potential revenues of €380 million over the long term.
Cons:Significant administrative complexity and collection costs including potential default; potential debt aversion in lower income groups may have some impact on participation; personal debt burden on graduates; significant time lag before system becomes self-financing.
Option 4: Combination of student loans and fees – based on increase of current student service charge and no State-provided loan service
Pros:Administrative simple, no expansion of means-testing administration; immediate revenue available as fees paid upfront.
Cons:Affordability issues for middle income groups; likely detrimental impact on participation rates above grant thresholds; revenue benefits relatively limited in view of tax relief; challenge in achieving broad acceptance.
On loans, the report says the new scheme “could be State-led [through the National Treasury Management Agency or through the European Investment Bank which has already began an involvement with the Hungarian equivalent] or led through private banks.” Preliminary discussions with the NTMA indicate that “there would be no difficulty in principle to the NTMA playing a role to facilitate borrowing some or all of the funding required to start a student loan fund”.The report says a discount scheme to encourage upfront payment of fees (instead of taking a loan) would generate revenue. But it would also create problems through a perception that those who are able to pay upfront benefit from lower fees.