It’s an urban myth that farmers can milk the third-level grant system, but there is help available for many farm families
It is that time of year when Leaving Cert students have nominated their preferred third-level course and the question of funding college is being gingerly brought up at many a family breakfast table.
There is a general perception that farmers’ children are among the main beneficiaries of third-level education grants, and that farmers can easily play the system.
This is an urban myth — less than half of farm families qualify for college grants.
Those who do qualify do so because the average family farm income as measured by the most recent National Farm Survey is €34,367, which falls well within the qualifying limit and not because the system is easily taken advantage of by farmers.
Farm income is assessed in a restrictive manner, and over 50pc of farmers or their spouses have off-farm income.
The cost of third-level education
The table below shows that the annual cost of attending college, for those who are not in a position to commute and who are not in receipt of any grants, is around €19,000.
A grant will cover around a third of this figure — which will of course vary depending on the location of the college.
Either way, it is a big ask to find this amount, even though the majority of students will find summer and weekend work.
Assessment of means
In determining a farmer’s income for the purpose of establishing their child’s eligibility for tgrants, most input and overhead cost are allowed but certain expenses which are allowed for tax purposes are disallowed, and certain income not chargeable to tax is included in determining eligibility.
Items disallowed for grant purposes:
■ Interest on loans for capital expenditure;
■ Leasing charges on equipment;
■ Capital allowances as claimable for tax purposes;
■ Stock relief as claimed for tax purposes;
■ Averaging of farm profits;
■ Wages paid to dependent family members;
■ Casual wages.
Some of this is wholly unreasonable. Any form of asset replacement or investment in the farm is not allowed despite the fact that a farm simply could not survive without replacing its essential plant, equipment and buildings.
Furthermore, averaging of farm profits is not allowed. This is a mechanism that was introduced to take account of the cyclical nature of farm incomes that generally does not occur in any other sector.
Surely the same should apply for education grant determination as farmers children should not be deprived of the opportunity of a college education as a direct result of farm product price fluctuations.
It is equally unfair that certain sources of income are included in the means assessment.
Items included in the calculation of your income:
■ Gifts or inheritances;
■ Part of the proceeds of a life assurance-based savings policy calculated as: policy proceeds less the amount of premiums paid in, divided by the number of years the policy was in force;
■ Sale of shares calculated as follows: sale proceeds less cost divided by the number of years you hold the shares;
■ Income from deposits and investments;
■ Income from forest plantations including premiums;
■ Rent from land lease before tax exemption.
The income of both the parents and the students is assessed but the student is exempted on the first €4,500, provided such earnings are outside normal term time.
The number of dependent children in the family will determine the various income thresholds.
For each additional child attending a third-level course of at least a year’s duration, the income limit is increased by €4,930 — see below.
Value of grants
The amount of grant payable is set out below. Where a student qualifies for a maintenance grant they will also qualify for the Student Contribution charge, which is currently €3,000.
Tax relief on student fees
Tax relief at the standard 20pc rate is allowable in respect of the Student Contribution but only for the second and subsequent students.
Undergraduate or post-graduate course fees including the Student Contribution are tax allowable at the 20pc rate up to a maximum of €7,000 per year.
There is no relief for exam fees, registration fees or administration fees, or accommodation and maintenance costs.
Martin O’Sullivan is the author of the ACA Farmers’ Handbook and is a farm business and tax consultant based in Carrick-on-Suir; www.som.ie