What would a ‘study now, pay later’ model for third level mean for the people SVP assist?

Posted by Tricia Keilthy  on 18 May 2017 | 0 comments

Last year the Government was presented by an   expert group with three options on the future funding of higher education in Ireland; a fully funded State model; the continuation of upfront student fees; and a student loans system.  This week the Joint Oireachtas Committee will continue to discuss these options. A decision is expected later this year.

SVP members know first-hand that the current system is inadequate from an accessibility and affordability point of view.  They have seen how the increase in the student contribution to €3,000 and changes and cuts to the maintenance grant in 2012 have put third level education further out of reach for many people.  Recognising these inadequacies, SVP run education bursary schemes across the country.  These bursaries cover fees as well as essentials like the cost of accommodation, transport, books and materials.  Without this support these students would not be able to take up a place at college.  

So how can these deficits be addressed?  Are student loans the answer and what would this mean for the people SVP assist?

The expert group favour income contingent loans rather than a mortgage type loan.  This means repayment of the loan would not kick in until post-college income reached a threshold of €26,000.  The option to pay upfront would remain.  On the one hand, this is seen as a fair approach as those who benefit from higher education, contribute towards the costs.  On the other hand, it assumes that the debt burden would be the same for all social groups.  As poorer students are less likely to get financial support from their family, their debt burden is likely to be greater – especially if a wealthier parent chooses to pay their child’s fee upfront. 

Income contingent loans (ICL) have also been put forward as more equitable than our current system because third level is ‘free at the point of access’.  But the experience of other countries with ICL such as the UK and Australia is that it has not increased participation rates among disadvantaged students and rates among mature and part-time students have fallen.  For example, in England between 2011 and 2014 the rate fell by 55% among part time students.  A reason for this is that disadvantaged and non-traditional students tend to be more reluctant to take on debt.  In particular, lone parents have to consider both the financial constraints of parenting alone and third level education.

SVP members regularly visit individuals and parents who would like to combine their caring or working role with study.  Although the current system provides very little support for people who would like to study part-time, it is unlikely the introduction of loans would improve participation of these groups.
Evidence consistently shows that enhancing the affordability of higher education through direct financial support that reduces the burden on disadvantaged students is proven to widen access.  Grants and scholarships should be a key component of the chosen funding model.  Academic and social supports during the college term are also proven to improve progression and outcomes of disadvantaged students.   Of equal importance are measures to address educational disadvantage during childhood and adolescence.

But these programmes and supports cost money— so the discussion always comes back to funding.

While ICL may be less costly in the long run than a fully funded state model – it won’t come cheap for the government in the short to medium term.  It is estimated that it would cost up to 10 Billion in the medium run, with losses occurring for at least 10 years.  It is also difficult to estimate how drop out, emigration, and possible recession will impact repayments.  As highlighted at a recent sitting of the Joint Oireachtas committee, there is a danger that cost recovery will become the principal objective of the higher education system and issues of access, equity, and quality become secondary.  There is also a very real risk that tuition fees would increase dramatically as they did in the UK.

Alternatives to addressing the funding crisis should be considered.  For example, the state could reduce the pressure on the third level sector by enhancing the provision of apprenticeships.  The Minister has promised 50,000 new apprenticeships by 2020, if delivered, this would reduce demand on higher level institutes.

The option of a pre-dominantly state funded model is possible, otherwise it wouldn’t have been put forward by the expert group.  Ultimately, it comes down to whether Ireland values higher education as a public good and a public service.   SVP members know better than most the transformative effect education has on people who experience poverty and social exclusion.  From this perspective, equality of opportunity, progression and outcome must be a central goal of our higher education system and it seems that loans are not be the best route forward to meet this goal.

Blog post written by Tricia Keilthy

Social Policy Development Officer

More by Tricia Keilthy

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