Saturday 1 October 2016

Everyone wants to go to college - but who will pay?

A leaked report this week called for a student loan scheme to solve the chronic underfunding of universities. Would it stop standards dropping or prove unworkable?

Published 20/12/2015 | 02:30

Choices: Matthew Moore, studying law and business, and Amy Delaney, studying social studies at Trinity College Dublin. Photo: Justin Farrelly.
Choices: Matthew Moore, studying law and business, and Amy Delaney, studying social studies at Trinity College Dublin. Photo: Justin Farrelly.
Funding fears: Ferdinand Von Prondzynski

In the Ireland of 2015, most parents want their sons and daughters to go to college, but nobody wants to pay for it.

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The picture of grown-up children with mortar boards on graduation day is a fixture on mantelpieces all over the country. It is a token of upward mobility that evokes enormous pride.

The number of students in the country has soared to over 210,000, and is expected to increase by a further 30pc in the coming decade.

One of the tasks of any new government will be to work out who pays the expensive bills for this college education, which generally works out at around €9,000 per student per year. Should it be the general taxpayer, who currently foots most of the bill, or should it be the student who benefits from the education?

In effect, the latter option would mean much higher bills for students, or the cash-strapped bank of mum and dad.

At present, Irish students pay fees of €3,000 per year in college fees, unless the low income of their parents qualifies them for a grant.

That charge is already high by European standards. In Germany students now pay only €50 per term, while in France the annual fee is only around €190 per year.

At the other extreme, in England fees have soared to over €11,000 per year for students - amounting to a staggering €33,000 for a three-year degree.

One might have expected a middle-class revolt at such astronomical fees, but David Cameron's government has somehow managed to implement them.

In Ireland during the recession, funding to third-level students has been slashed.

There is common agreement that the system is creaking. There are higher lecturer-to-student ratios, buildings and equipment are less well maintained, and some colleges have slipped down international league tables.

University College Cork recently had one of its chemical engineering degrees downgraded, because of a shortfall in academic staff. Dr Kevin Denny, lecturer in economics at UCD, says: "The universities have cut back on all sorts of services including maintenance of buildings.

"We have had to cut back on tutorials and have much less contact with students. Classes are bigger. It is becoming a bare bones education.

"We get student feedback and they say they want more tutorials, but we have to tell them we can't afford it."

While lecturers, students and the education authorities agree that colleges are struggling to maintain standards, there is less agreement on how to plug the funding gap.

Last year, the President of NUI Maynooth, Philip Nolan, suggested fees as high as €6,000 a year were needed to put colleges on a sound financial footing. But only a government with a hara-kiri instinct would go into an election offering that kind of charge to the middle classes as their offspring go to college.

So far, the approach of successive governments has been to commission reports on the issue, muddle through and hope for the best. Although there were plenty of previous reports on the matter, the Government commissioned an expert group to look into the funding of higher education, and some of the details were leaked this week.

The expert group reportedly favours a loan scheme. Under this plan, every student would have the option of deferring the payment of their fees, and then gradually pay these back once they have reached a certain income level.

The leaked report does not give the key piece of information - how much each student would have to pay, but it sets a notional amount of €4,000 per year in tuition fees, or €16,000 for a four-year degree.

With fees of that amount, college graduates would pay back around €25 a week over a 15-year period once they reach a certain income level and there would be some interest charges built into this.

In reality, better-off parents would probably pay the fees up front, while those in the middle or on lower incomes would carry the debt as they embark on their careers.

Dr Kevin Denny says a loan scheme is the fairest way of paying for third-level colleges.

"In an ideal world, we would all like free education, but somebody has to pay for it," he says. "Should someone else have to pay for you to go to third level? If you go through college and become a brain surgeon and make a fortune, it doesn't make sense that you don't have to pay for it.

"The beauty of an income-contingent loan system is that you only pay if you do well, and you have a reasonable income. If it doesn't work out, you don't have to pay."

Dr Denny says loan schemes are in operation in Australia, New Zealand and England. He says there is no evidence that they discourage those from less wealthy backgrounds from going to college.

Others disagree. Amy Delaney, a social studies student at Trinity College, is one of the few from her Dublin school to have made it to college. She has applied for a grant and also supports herself by working in a shop.

"There is already a stigma in my school about going to a place like Trinity College. If you were then faced with €4,000 in tuition fees and paying back €25 a week, there is no way people would want to do it."

Opponents of increased fees and loan schemes argue that it will saddle young people with heavy debts. In America, where fees are among the most expensive, student debt has tripled over the past decade to $1.19 trillion. The Wall Street Journal recently reported that student debt has become a "crushing burden" for many Americans, and up to 7 million people have defaulted on loans.

Matthew Moore, a mature student of law and business at Trinity, says: "If going to college involved taking on a huge amount of debt I don't think I would have been able to do it. If there was going to be a huge cost attached, I wouldn't be able to continue with my education."

Ferdinand Von Prondzynski saw the shortcomings of the Irish university funding model as President of Dublin City University, and is now principal of Robert Gordon University in Aberdeen. He supports substantial increases in fees for better-off students, the option of a loan scheme for those in middle-income groups, and a complete waiver for those from disadvantaged backgrounds.

"Irish universities are seriously underfunded. It is clear that the State does not have the capacity to provide the resources that would make them competitive. Relying largely on public funding will inevitably see a continuing erosion of their standing."

He may support higher fees, but Professor Von Prondzynski sees major disadvantages to a loan scheme that depends on the future income of graduates. What happens if the bright young things of Ireland simply scarper and don't pay back their loans. Could it work in a country of high emigration?

"A scheme such as this creates an uncertain demand on public finances in the future, as many of the loans will remain unpaid," he says.

The professor points to the experience in Australia after 25 years of a loan system.

"There is a staggering A$70bn (€46bn) of unpaid loans in the system, much of which will have to be written off. If that happened in Ireland, it would create a public finance catastrophe."

The possibility of heavy default will weigh heavily on any government introducing a loans scheme.

However, Dr Kevin Denny says it should be possible for the government to collect the money, even from those living abroad. In New Zealand, where there is a loan scheme in place, the government has clamped down on student debt defaulters who are based abroad, and those returning home even risk arrest by the authorities.

Dr Denny says of the possibility of default on Irish student loans: "People take out car loans, and there isn't any great concern that they will go abroad and not repay them. So why should it be different with student loans?"

Irish universities desperately need more money if they are to maintain standards, but the timing is not good from an electoral point of view if they were hoping for increased revenues through a loan scheme.

No party is going to go into an election promising an increase in third-level fees and students may be spared a hike in charges until September 2017.

The Minister of Education Jan O'Sullivan has put the issue on the long finger, ensuring that the next Government will have to deal with it.

At some point, a minister will have to tackle the issue head on, by increasing exchequer funding to third-level substantially, or increasing fees.

Based on past experience, parents and their student offspring should take anything said about third level fees at the next election with a hefty pinch of salt.

During the last general election campaign, Labour's Education spokesman Ruairí Quinn signed a solemn pledge not to increase the student contribution from €1,500.

But he quickly reneged on that promise and by the following year he had announced that the fees would rise to €3,000 this year.

Reality cheque

College fees in American are notoriously expensive. Business Insider ranked Harvey Mudd College in California as the most expensive US college with total annual fees of $67,255 (€62,000), That includes tuition for $50,749 and room and board for $16,506.

In Germany students pay only €50 per term, while in France the annual fee is around €190 per year.

Trinity College is the top-ranking university in Ireland according to the Times Higher Education Supplement. It slid from 138th in the world to 160th in the latest survey.

Third-level fees in Ireland have doubled during the lifetime of this government from €1,500 to €3,000 per year.

Since 2009 in Ireland there has been a 22pc drop in funding per student from €11,000 to €9,000.

In England, where there is a loan scheme in place, students pay over €11,000 per year for going to university.

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