Thursday 23 October 2014

Quinn looks at new plan to tax our graduates

Published 17/11/2012 | 05:00

STUDENTS face a graduate-tax-style regime to pay for third-level education under a new plan presented by the country's leading economic think tank.

Third-level students would pay back the cost of their degree once they hit a certain income under radical new proposals being looked at by Education Minster Ruairi Quinn.

The Economic and Social Research Institute (ESRI) has said the time has come for reform of third-level funding – with a higher financial contribution from students or graduates.

Under the plan, fees would be scrapped. Instead, the Government would cover the cost of going to college but graduates would pay back the money once their earnings hit a certain threshold.

The state would effectively have loaned the money to the student – and it would later recoup college costs from graduates over a period of time, suggested at 15 years.

It would mean many graduates would be in their late 30s before they clear their "debt" to the state.

And while their repayments would be delayed, the scheme would see them ultimately paying more than the current upfront Student Contribution Charge of €2,250.

It is known as an Income Contingent Loan (ICL) scheme, which is already operating in some other countries.

This type of scheme differs from the traditional graduate tax, where college finishers would be asked to pay additional tax over the course of their entire lives.

The ICL scheme instead involves a levy from pay packets for a specific time period.

However, at this stage the ESRI does not go into detail about what costs associated with going to college students would be expected to repay.

But the ESRI said Ireland is "well placed" to consider the system, which is similar to that used in Australia, the UK, New Zealand and Canada.

In the short term, students and their parents can breathe a sigh of relief as Mr Quinn has no plans to go beyond the current Student Contribution Charge. However, this is set to increase to €3,000 by 2015.

But the ESRI noted that eliminating these upfront costs was an important consideration for middle-income families who narrowly miss out on maintenance grants.

The proposal has the weight of the ESRI behind it and keeps the spotlight on the issue of seeking a higher contribution from students.

The introduction of some sort of student loan or repayment scheme is often seen as a way of the State recouping some of the cost of third-level education.

The ESRI paper dealt with the expected expansion of student numbers at third level – and said there was a need for a reform of funding.

Student numbers are going to rise by more than 40,000 to 168,000 by 2020, meaning the higher-education system will need another €500m a year.

The paper from the ESRI was among a number released by the Higher Education Authority (HEA) yesterday as part of the debate about the future shape of third-level education.

The authority is preparing to deliver a final set of proposals on a reformed third-level landscape to Mr Quinn by next April.

Another controversial paper formally released yesterday was from an international panel proposing a TCD-UCD merger and the possibility of mergers between universities and institutes of technology.

The HEA also released an analysis of submissions made by colleges on their future vision.

It expressed certain disappointment that the proposals fall short of what it believes is needed and the HEA will be meeting with individual colleges early in the new year to discuss the matter.

Meanwhile, students will vent their anger at the current cost of going to college, and planned increases, in a protest outside Tanaiste and Labour leader Eamon Gilmore's constituency office on Monday.

Merger

Mr Quinn's lack of appetite for certain proposals including the loan scheme and the TCD-UCD merger was evident in a statement released last night.

Pointedly, he said he was anxious that the review adhered to government policy adding that "any divergence has the potential to significantly derail the process of reform which is already well underway".

Mr Quinn will give a more detailed response to the reports, as well as setting out his vision for reform, when he meets with the heads of universities and the institutes of technology, next Thursday.

Irish Independent

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