Dr. Aedín Doris:

There were various interesting questions on emigration. Let me talk about that first and then come back to access and some of the other things that came up.

One of the difficulties in trying to incorporate emigration into the modelling is that there is a dearth if information about emigration, which is remarkable considering how much a feature of our society it is. It is clearly the standout issue when trying to work out whether an income-contingent loan would work. I took a guess at 20%. I subsequently found that an OECD study, which tried to calculate graduate emigration across different countries, estimated it at 21% of the stock of graduates. I was happy to see my guess was not too far out. It is higher than other countries. I believe that of all the OECD countries, it was the highest. The next closest was New Zealand, which has an income-contingent loan system.

Therefore, we have an idea that the proportion of graduate emigrants is about 20% in any given year, but we do not know whether they are abroad temporarily or permanently. Again I made a guess that the proportion is about 50:50. When emigrants come back, the repayment is not a problem because they slot back in. It delays things and sets the repayment schedule back a bit. It is a different matter with permanent emigrants.

Obviously, one of the big concerns is whether this would incentivise emigration or prevent return migration. Although we know there are some positive aspects to emigration, most of us see it as a negative thing. I have not seen any economic research on this for Ireland, but there is some research for Australia. It seems that the factors determining return migration are actually not economic but are mostly to do with life cycle. When people get to the stage of having children, they come home. If that is important to them, they come home even if they take a hit on their standard of living. On that limited basis, I would not be too concerned about preventing return migration.

However, there is very little evidence on the impact of student loans on outward migration. Deputy Nolan asked if there was any evidence of increasing emigration by graduates in the UK. I have seen no commentary on that, which makes me think it is not an issue, but the UK is starting from a lower base than we do. It has less graduate emigration to start with. As far as I understand it, an increase in graduate migration as a result of the student loan system there has not been an issue.

The Chairman asked about the size of the subsidy compared with other countries. In the absence of emigration, it is similar to other countries. That is why I say that emigration is key. Based on how I looked it, it would add about 10% to the subsidy, which is not inconsiderable but would not completely destroy the system either. I have assumed that emigrants do not pay anything while abroad, which is not necessarily the case. Other countries have started to try to work on how to bring emigrants in. I agree that it would be inequitable and would be perceived as very unfair by those left behind if emigrants did not have to pay anything. There may be exceptions to this, but broadly speaking graduates want to be legally compliant.

While it has only recently been introduced and we do not know how it will work, Australia has made it a legal requirement for graduates to pay a minimum amount of their loans every year while they are abroad. People have to send that money home. In that way, it loses the income contingency aspect, which is a negative, but it is set at $1,000 a year and so is not excessive. It is manageable and graduates can chip away at it. I think that is probably the way to go. Realistically we will not get 100% repayment from emigrants, but if we could get even a majority of it repaid on that basis, it would make a substantial difference to the size of the subsidy that was required and also counteract the feelings of inequity.

Deputy Thomas Byrne is exactly right on the access issue. Income-contingent loans do not result in debt as we usually mean debt. It is a debt that only has to be repaid if it is affordable. People understand that when they take the loans out. I accept a little bit of education will be required for school leavers, as has been done in the UK, to make them understand that this is not debt in the usual sense. There is evidence that lower-income people have a higher degree of risk aversion. The whole point of income-contingent loans is that it reduces the risk enormously and the students entering these systems understand that. When the fees in the UK went from £3,000 to £9,000 practically overnight, many people expected a big drop-off in participation by the lower socioeconomic groups, but it has not materialised at all. One of the reasons is that the students understand that they will not have to repay this if they cannot afford it. The key thing is to make it affordable.

Deputy Byrne asked about the €37,000 income. I have done a quick tot and I hope I have done it correctly. We ran a couple of different scenarios using different parameters. It depends on whether we have a system based on marginal income - that is income just over the threshold - in which case the loan repayments would be calculated on the difference between €37,000 and €26,000, or whether it would be calculated on the total income because that €37,000 would be over the threshold. Using the marginal basis, it would be €73 a month and using the total basis it would be €123 a month.