Student loan scheme will further deter poorer students

Many students could face a lifetime of debt if the Government adopts the Australian education loan model, writes Colm Jordan

Many students could face a lifetime of debt if the Government adopts the Australian education loan model, writes Colm Jordan.

The Minister for Education, Mr Dempsey, has acknowledged that the biggest challenge facing Irish education today is increasing the number of students from disadvantaged families attending college. However, The Irish Times has revealed he is considering the Australian model of a student loan system for students, despite the fact this has been proven to be a disincentive to poorer families from attending college. This is extremely worrying for anybody concerned with increasing our college participation rates.

We need to examine the history of the scheme in Australia to gain perspective. Free education was abolished at the end of the 1980s and replaced with an income-contingent loan scheme called Higher Education Contribution Scheme (HECS) set at 20 per cent of average course cost. Since then the HECS rates have increased significantly to about 34 per cent of course costs.

The government proportion of university funding is now lower than it was in 1939 and Australian students are paying more than many US students in public universities.


The Australian government has argued that this shift to "user pays" has had little impact on equity because of the deferred nature of the income-contingent loan scheme (study now, pay later). However, recently it has begun to concede there may be a study debt impact as some equity groups (mature students, rural students, working class) seem to be less willing to get into debt of tens of thousands of dollars, particularly when the repayment threshold is so low that it is only just above the top rate for the Australian single-mother allowance. Mr Dempsey needs to do his homework. The Australian statistics speak for themselves.

One in three Australian women will still be in debt at the age of 65, with 15-25 per cent of people never paying off their debt. This system has been used to reduce higher education expenditure, and State funding fell dramatically from about 62 per cent of total university revenue in 1996 to 48 per cent today.

The administrative cost of loans, including the costs arising from repayment defaults, will in the long term enormously reduce the savings that were meant to be made.

On the other hand, our current free fees system is a sign of our national involvement in higher education, a collective investment in skill which if allowed to flourish, will have hugely economic and social benefits. A loan system would send the wrong message to investors around the world, at an already perilous time for our economy.

Australia, for instance, has slipped from second in a league table of bachelor degree recipients in OECD countries in the early 1990s to ninth in 1999. It is likely this would happen here if a loan system is introduced.

Many second-level students would be forced to choose between a lifetime of debt or entering the work force at 17. The Union of Students in Ireland (USI) estimates that it costs €6,148 to attend college for a year, excluding the €670 registration fee.

With no fees, students are invariably in debt when they finish college, so how many 17-year-olds from poor backgrounds will choose further study, and debt, over immediate entry into the workplace?

A recent Australian study found that people with loan debts were less likely to buy houses, take out loans and have children because they were not willing to take on more debt. Such a move here would cause massive social and economic problems.

At present the Australian national student debt is $8.7 billion (set to rise to $11.4 billion in 2004). The idea of a debt for life, the uncertainty of a better life after a degree, the ingrained nature of financial disadvantage means that most poor people either choose to forgo university or simply cannot afford the debt.

As Emmet Oliver highlighted in The Irish Times last month, foreign students studying at Irish universities are raising concerns about high tuition fees. Irish colleges have been aggressively recruiting non-EU students over the past five years mainly because they provide such a high fee income compared to Irish students.

This signals the commodification of education creeping into the State. A loan system operated by the banks would allow colleges to charge Irish students with exorbitant fees, which they may never be able to pay back fully.

The report on the Action Group for Access to Third-Level Education identified many ways in which the problem of disadvantaged access can be tackled, the vast majority of which have yet to be implemented.

Mr Dempsey announced last month that the National Access office for colleges has been established, which was one of the key recommendations. However, it is not enough to merely announce such a development. The Minister needs to clarify immediately the status of this office, what mandate and powers it will have, and provide a timeframe for any implementations.

We need to address immediately the scandal of low numbers of disadvantaged students in our colleges. A loan system will only make the situation worse. Such a move would be catastrophic for not just students, but the future state of our economy.

Mr Dempsey must now meet with the USI to move towards creating an equitable education system for all in a transparent manner.

Colm Jordan is President of the Union of Students in Ireland (USI) and is a member of the Higher Education Authority (HEA) and the National Qualifications Authority of Ireland (NQAI).