Head to Head: Will the BOI Loan Scheme be effective in helping students pay college fees?

With news of USI launching a campaign highlighting concerns about the controversial Bank of Ireland postgraduate loan scheme, Emily Mullen and David Farrell debate what impact the loan could have on students.


Bank of Ireland is launching a new loan scheme ahead of the academic year, aiming to provide a new system of covering college fees with minimal governmental capital. The argument resides, however, as to whether this system, if managed properly, could free a portion of the heavy reliance that education hold on the government’s subsidies.The College Loan scheme is a tough issue for students to grapple with. In theory, it is the solution to financial issues of both students and the state. The current system of expecting students to provide either the extensive fees upfront, or expecting students to be provided with a governmental grant in order to progress into postgraduate study, are both undesirable.The concept of financial independence and low interest rates that have been practiced in England, Australia and beyond, appeals to Irish students. But when faced with a scheme that operates seamlessly on an international basis, the Irish government, hand in hand with Bank of Ireland, managed to bollocks it up. Through hiking up interest rates and restricting those applicable for the loan terms, the scheme has restricted many students who were prepared to make the financial risk to enrol in postgraduate studies. The requirements for loans are structured around an altogether more financially ‘comfortable’ student, one with a clean credit history and one that is prepared to pay the 9.7% interest rates three months after graduating. Far from finding a solution to the grant system, the government has managed to ruin an exemplary framework loan system and isolate the majority of students from the scheme.However, students who aspire to leave University with a postgraduate degree should be expected to foot some of the costly bill that it imposes. A postgraduate education is a lengthy and exorbitant process, one that a student who has enjoyed a comparatively free undergraduate education, should take some responsibility for. A masters or doctorate is could be considered a superfluous choice, and far from a necessity. Many choose it to further their employment opportunities, yet they already hold an important degree.The grant system is applicable for the undergraduate system, yet the postgraduate system is an altogether different entity. The extensive cost of the completion of a masters or a PhD should be the responsibility of the student and not of the government. A fine line should be drawn between a free education system and taking the government and the taxpayer for a ride. It is incorrect to prophesize that this scheme will cause a ‘two-tier’ educational system; it will just leave the cost of postgraduate education up to the individual, who ultimately will benefit the most from this educational investment.Some costs should be incurred for a top class education, it should be standard that everyone has the right to an undergraduate education, but only those dedicated and willing to sacrifice should avail of a postgraduate education. It is not feasible that every student can avail of postgraduate studies. It is the top end of the educational spectrum and it has to maintain its exclusivity otherwise its importance, esteem and regard will become inconsequential. The argument that only the ‘rich’ or ‘comfortable’ can only avail of this exclusive service, is possibly correct in terms of only students that have a clean credit history can avail of this incredibly flawed college loan scheme proposed by Bank of Ireland. Yet it is not up to the state to fit the bill of a postgraduate education, it should be an autonomous act, facilitated by a decent college loan scheme.by Emily MullenRebuttal - David FarrellMy colleague does not so much promote or justify the loan scheme, but ultimately concedes that the BOI and government have 'managed to bollocks it up'. In this she is correct. However her diversion into the funding of postgraduate studies misses the point.The scheme is aimed towards undergraduates, not postgraduates. As a result of last year’s budget there are no postgraduate grants available. They are left to look for funds through more conventional methods. This scheme does absolutely nothing to redress it or any of the underlying funding difficulties in our current system. It maintains dependence upon student’s parents and stymies efforts to progress further in studies.______________________________________________________________________


As term ended and students thoughts turned. Unfortunately, this scheme fails to address many of the issues that arise when paying for third level education on both a personal and a national level. Firstly, the loan dos not take into account the issue that Bank of Ireland themselves pointed out in a 2010 survey that over half of students are dependent on their parents to pay their registration fees.This scheme is the worst of two worlds, maintaining the dependency upon parents and loading students with debt after university. Given the state of the economy and the belief that a masters degree is now essential, the situation is further complicated and less appealing. It merely leaves the student with a debt that is to be paid at a rather high interest rate and kicks the can down the road. The loan itself isn't even a new or revolutionary product as some would assert. It is extremely similar to the terms offered on a credit union student loan, the exception being that the payments from the credit union can be staggered, and the interest rate doesn't suddenly bump up leaving both parties responsible for the debt.to the summer ahead, Bank of Ireland and Trinity College announced a postgraduate loan scheme to help fund the cost of college. The loan allows for students fees to be paid automatically to the University by the bank. The loan requires ones parents to provide credit in order to qualify for the loan. Parents pay €100 a month off the total €9000, payable at a special lower rate of 5.1%, after which the debt moves to the student upon graduation and the interest rate rises to a higher rate of 9.7%. The scheme has recently received the backing of the government and is expected to be introduced to other universities soon.Barring the personal issues, the scheme is nothing but a stop-gap and can only hinder debate on education funding. The backing of government for the scheme is in itself jarring. It threatens to further legitimise the process of borrowing to pay for university. Whilst I wouldn't dare enter into the hyperbole of others and forecast levels of loans akin to those seen in the US, it does set a dangerous precedent. The formalisation of accruing debt to obtain an education while being encumbered by it, is not only poor practice but a position, according to numerous Red C polls, that most disagree with. The scheme fails to make allowances for the futile jobs market and could see parents having to continue supporting their child to pay this loan at the higher interest rate, defeating the initial purpose. The necessity for credit and regular payments may see the many families in the 'grey area' of grant eligibility left high and dry, failing to support those who need it most and the people the scheme should cater for.Regardless of one's personal view of third level funding, this loan scheme postpones necessary reforms and discussion on the future of third level education. Government support for schemes like these can lock us into the current system for the foreseeable future. It only serves to delay the inevitable and put off the necessary discussion that reforms that are needed for our universities to thrive. The process of reform needs to commence now in the midst of funding crises at all levels. It is time to re-valuate the way we fund our education. The loan scheme is not a sustainable solution and doesn't provide any semblance of an answer. It distracts and diverts attention from the real debate and is emblematic of the disjointed and staggered approach that the current government seems to have toward the issue. It's time to focus on the future, to allow all students access to education and ensuring the education they receive is up to scratch. This cannot be achieved through this pathetic half measure like the BOI postgraduate loan scheme.By David FarrellRebuttal - Emily MullenThere is no denying the fact that BOI’s loan scheme is a muddled arrangement centered around financial surety and imbued with technicalities. That questions are being raised on the credibility and the very integrity of the scheme is indeed jarring. The worry is that this scheme could create a steep proliferation in fees, allowing the government to increase educational fees significantly when a financial framework is in place. An indication of this is, according to the USI, how little communication BOI is having with Trinity’s Student Union, and how many inquiries the Union’s sabbatical officers are having to make as to the particulars of the scheme.Through this disassociation with Unions and dependency upon parental bonds and high rates, BOI appears to be unconcerned with how well students will cope with fees, but moreover with how governmental strategies might be further implemented. The only element of positivity that can been drawn form this outline, is that it is a step in hopefully the right direction of educational financial reform and through this trial in TCD, criticisms and issues can be met with answers and solutions to this perversely flawed scheme.