College fees options emerge Sunday, July 12, 2009 By Martha Kearns The long-awaited report setting out the options for the reintroduction of third-level fees was finally circulated to cabinet members last week - almost a year after it was first mooted by the education minister last August.
Yesterday, it was revealed that a college loan plan - favoured by Batt O’Keeffe, the Minister for Education - would cost students a minimum of €21,000. The report suggests fees of €5,715 for arts and commerce and €7,272 for nursing and engineering.
It sets out four new options for the reintroduction of some form of student contribution, while also outlining the pros and cons of remaining with the current system of student service charges and means tested grants. (See below for the full list of options and their costs to the exchequer.)
The report, carried out by officials in the Department of Education, will not be easy reading for anyone who hoping that the reintroduction of fees might never happen.
It said that, as both the state and the student benefited from higher education, it was appropriate that the cost of participation be shared. However, at present, it said, this burden was ‘‘excessively weighted’’ on the state. The current system, where students who are not entitled to mean-tested grants pay a service charge - €1,500 from the next academic year - costs the exchequer €395 million per year. Under a possible new loan system, up to €380 million in revenue could be yielded annually.
Loan options
It i s understood that O’Keeffe has signalled his support for a new loan scheme that would require students to repay the cost of fees after graduation.
While the report’s authors do not recommend any one option, this view is backed by the fact that the report goes into much detail outlining how student loan schemes work.
In this case, one of the scenarios outlined in Option 3, which looks at the introduction of fees based on a student loan facility, is likely to be introduced. Three variations of Option 3 were outlined and, while all initially would result in a large outlay for the exchequer, they would result in a greater payback over time.
The first, known as 3a, would introduce a fee that all students would be liable for, including those receiving grants, but no upfront payment would need to be made. Repayments would not be made until the student’s future earnings went above a certain threshold, as is the case in the much-discussed Australian model for third-level student contributions.
This would initially cost the exchequer €470 million per year but would eventually cost €15 million to run, and in the long-term would save €380 million per year. The report said that this option could eventually become self-financing, but it is anticipated that it would take 17 years to reach this point.
According to the report, the availability of a loan would relieve affordabilty issues for students just above the income threshold for student grants. This, it said, would be an important factor in ensuring that it would not affect adversely participation by this group.
‘‘Indeed, the inclusion of the current student services charge (€1,500 in 2009/10) in the loan based fee would remove the upfront payment currently required by students/families and may encourage enhanced participation,” it read.
Another benefit of this option would be that future revenues would be enhanced by making all students liable for tuition fee repayment, based on future income. However, it did point out that there was significant administrative complexity related to this option and that there was a possibility of potential defaulters.
The second option, 3b, is the same as 3a, except access to the loan would be limited to students under a certain qualifying threshold. Those above the threshold would have to pay the fees upfront, while those below it would have access to the loan facility.
The purpose of this option would be to maximise upfront revenues generated by the payment of fees from those who can afford it and, by reducing the numbers involved in the loan scheme, cut the overall cost associated with the first option.
However, this extra layer would involve more administration requirements and add to the complexity of the scheme.
Third-level sources had always believed that an option similar to this one - which is a variation of the Australian model - would be introduced. However, it was speculated last week that O’Keeffe backed away from upfront fees because of opposition from Green Party colleagues in cabinet.
While the minister dismissed these claims last week, one source said that the Greens had ‘‘effectively vetoed’’ the upfront fees option. Whether or not the coalition partners would be happy with the model, as outlined in option 3b, remains to be seen.
It is worth pointing out that, if upfront fees are suggested, the backlash from parents and the Union of Students of Ireland (USI) - whose members were protesting last week over the introduction of any form of contribution - could be massive.
But USI president Peter Mannion also said last week that introducing a deferred loan system was devoid of foresight and would ‘‘bankrupt the entire education sector’’.
The third option, 3c, would bring in fees and loans for all students, but it would see the abolition of the current student grant system. All students, irrespective of means, would
have to pay some contribution on a deferred loan basis, and there would be no grants, but the loans would cover maintenance costs for students, where required.
This option is initially the most expensive, as it would cost €710 million until loans started to be repaid. However, it is estimated that it would then cost €15 million a year, with a potential revenue saving to the exchequer of €380 million annually.
Why fees?
Whatever option is finally chosen, the report’s authors stressed the need for managed change so that stability would be provided for students, and any problems with the scheme could be ironed out.
It recommends that, initially, the fee regime be introduced to all institutions in a particular sector and then, if successful, institutions could possibly vary their fees. It said that several countries had sought to use student contributions as a way to increase competition between institutions.
The logic behind this is that if they all were charging the same fee, there would be no incentives for any institution to improve its services beyond the average, as it would increase costs without any financial return from being able to increase students’ contributions.
‘‘Changes to allow institutions some freedoms to set their fees can potentially change such a situation,” said the report, adding that this was only one way that institutions were improving quality.
It said this was also complicated by the fact that a high proportion of Irish students studied close to home, and they could be forced to pay high fees to attend their local college.
There was also a danger that, if fee-setting was to become liberalised, some institutions would be able to charge ‘‘excessively high fee rates, perhaps resting more on reputation than service’’.
The fees being charged in other neighbouring jurisdictions that might be considered by Irish students had also to be taken into account. In 2008, 2,609 students accepted places in Britain.
The report concluded that it was likely that fees for Irish institutions could ‘‘considerably exceed’’ those in Britain without creating incentives to study there. This was because Irish students would face higher living costs than if they stayed in Ireland, as around 50 per cent live at home while in higher education.
Consideration also needed to be given to what implications introducing fees would have on other forms of state supported post-secondary training, such as apprenticeships.
‘‘The introduction of further fees for participation in higher education would . . . further reduce the attractiveness of higher education against apprenticeship.”
What now?
Much debate is likely to surround the three options outlined above, but ultimately the minister still has to get one of them by cabinet, which includes three former education ministers - Micheál Martin, Noel Dempsey and Mary Hanafin.
O’Keeffe said last week that he wanted to take the views of the cabinet onboard before making a formal recommendation to them. It now seems this will not happen until September at the earliest - with talk now that it might not be before the Lisbon Treaty referendum rerun on October 2.
This means there may still not be a decision at least 15 months after the issue was first raised. Delays have beset O’Keeffe since he first asked his department officials to investigate the issue.
First of all, the report was to be presented to the cabinet in the first two weeks of April. However, the emergency budget took priority and it was believed that making another announcement that would hit people’s pockets would not be wise.
Making a decision before the local and European elections was also feared, as it could cause even more problems for the beleaguered government on the doorsteps. So it was pushed back again.
While there are political reasons for delaying the date of a politically sensitive issue such as the student contribution, those who will have to pay the fees remain in the dark.
The 53,000 Leaving Certificate students who are receiving their results next month already know that they are facing an increase in registration charges which will average around €1,500, as against €900 last year. But they are unsure how the return of college fees will affect them in their latter years in college.
It had initially been thought that the government would be able to introduce the plans for the academic year of 2010/11 - and, indeed, this date is mentioned in the report. But with all the delays so far, some education sources are saying that it is more likely that it will be 2011/12 before fees are introduced.
Students have been warned that going to college this year would not exempt them from paying the contribution whenever it may be introduced. But many are not happy with that idea, especially because of the lack of clarity about what form the payments would take and when they would be introduced.
‘‘Students who go into college this year should not be part of the scheme whenever it comes in,” said Fine Gael education spokesman Brian Hayes. ‘‘You cannot pull the rug from under the feet of people who have entered college on the basis of one set of rules. You do not change the rules mid-term, even if the government say it’s be en well flagged.”
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