Do Student Loans Kill Dreams?

With a new report on higher level funding being examined by the Oireachtas, Elizabeth Wells asks whether a student loan scheme would help or harm students.Higher-education institutes (HEIs) across Ireland are facing a major funding crisis. The Cassells’ report, published in March of last year by an expert group, concluded an increase of €600 million in funding annually would be needed by 2021, and a further increase of €I billion would be needed by 2030. The report outlined three potential solutions for funding.Under the current system, students above a certain income threshold pay €3000 a year in fees, while the remaining funding comes from exchequer resources. The first option in the report is to retain these fees while increasing exchequer funding. This would result in an approximate €1 billion increase in state funding per year by 2030, according to Dr. Aedin Doris, part of the expert group who contributed to the report and an economics lecturer at Maynooth University.The second option is to eliminate these fees entirely, subsequently providing all funding from exchequer resources, resulting in a roughly €1.26 billion increase in state funding.The third option would be to introduce fees, of either €4,000 or €5,000 per year, for all students and implement an income-contingent loan (ICL) program, requiring a €560 to 700 million increase in state funding needed, respectively.Income-contingent loans are not repaid until the borrower reaches a certain income threshold, at which point the rates are paid in accordance to the borrower’s annual income. This scheme would potentially put students in €16-20,0000 of debt upon graduation.The ICL scheme has been met with fierce opposition from student organizations across the country. The Irish Second-Level Student Unions have launched a #saynotoloans campaign on social media, calling on the legislature to reject any bills that would involve implementing student loans.The Union of Students in Ireland (USI) organised Marches for Education in 2016 and 2017 with thousands of students taking to the streets of Dublin to call for greater access to education.
“[Education] is important for students to help them progress in life and give them the chance to get the best quality of life as they can get.”
“We are trying to get a lot of public and media attention,” Kerrigan said, “and show how students are angry, how we are not willing to accept any form of income-contingent loan scheme, and that we want the higher education funding crises to be fixed.”Kerrigan called for increased funding to be provided from the exchequer and the National Training Fund, as well as possibly obtaining further funding from a percentage of corporate taxes because “businesses, especially large corporations, make huge profits off of the highly-educated individuals that Ireland provides.”Kerrigan and USI believe education is a fundamental right that should be publicly funded for all citizens.“[Education] is important for students to help them progress in life and give them the chance to get the best quality of life as they can get.”On the other hand, because both students and the public reap benefits from higher education, a case can be made that the cost burden should be shared between the student and the state, the report states.Doris’ stance is that the ICL scheme would be the most feasible option for solving the current funding dilemma, and Doris believes the benefits for higher education far outweigh the cost for students.
“The whole idea is that because no student has to pay up-front fees, no student is prevented from attending college."
“On average, Irish graduates earn about €350,000 more over their lifetimes than those with just a Leaving Cert. The returns to Higher Education in Ireland are the highest in the OECD,” she said.Under an ICL scheme, if a student does not reach a certain income, they are not required to pay it back and are therefore “insured” from being unlucky or unsuccessful in the labour market.Doris said she believes an ICL program would not have adverse effects on enrollment, specifically in students from lower socio-economic backgrounds.“The whole idea is that because no student has to pay up-front fees, no student is prevented from attending college. This has been borne out by the experience in other countries with ICLs. Students from lower socio-economic backgrounds are not discouraged from attending college if fees are covered by an ICL scheme,” she said.The Joint Oireachtas Committee on Education is reviewing the Cassell’s report, but no decision has been made. According to a report published by The Journal in July 2017, the Labour Party has called on the government to reject implementation of an ICL scheme, which was supported by Sinn Féin. However, neither Fine Gael nor Fianna Fáil has taken the idea off the table.