Professor Diarmuid Hegarty:

I think it is eminently sensible, but the reality of the matter is that students loans are politically toxic. I believe it is right. Deputy Conway-Walsh was worried about the €27,000 people would have to repay after leaving university. That same person will probably borrow up to €400,000 as a mortgage on a house. In that context, a €27,000 student loan to be repaid is very small. We are not talking about the hundreds of thousands paid in the UK, so I think there is a lack of balance here. The idea that the loan does not become repayable until an income threshold has been reached is very fair. In the event of redundancy, unemployment or whatever else, the student loan should not be repayable during that period. It is workable. I proposed in my paper that we should have not a student loan system as a substitute but that there should be a student loan system through a not-for-profit entity providing loans at no more than 4% such that it is not designed to enrich the coffers of financial institutions but, rather, provides the additional funds people need to survive third level. If we propose a student loan system as a substitute, I do not think that will be a runner politically.

I wish to come back on an earlier point about student accommodation.

There is a serious problem of trust in Government. Members must let me tell them what exactly happened in respect of the tax-based funding of student accommodation. It was introduced in the Finance Act of 1999. The deadline was to be December 2004 and it was extended to June 2006. It had the aim of encouraging private funds into building student accommodation, which it did. Then, in the Finance Act of 2006 that funding was effectively withdrawn. People had borrowed money on the basis of substantial funds to build student accommodation. The deals with the banks were done on the basis that the repayment would be made out of tax-free income because that was what was offered. The Dáil chose to withdraw that relief so that the prospective rental income, which was really effectively scheduled for repayment, was taxed. To my mind that was a reprehensible breach of trust. I am not sure developers are going to trust Government if it offers tax-based funding for student accommodation.

If we want student accommodation, we have to support it in a number of ways. It could be done by providing tax relief on the rent that is paid, through a similar provision to the Finance Act of 1999 which gave relief immediately, but with the clear promise that it will not be withdrawn halfway through. It could be done through student supports, through SUSI. There are a number of ways. Right now, student accommodation is very expensive and not open to students in lower income groups. That is the reality of the matter. Having said that, we built our student accommodation in 2004 and it is now full. It reflects what Deputy Conway-Walsh was referring to, a shortage of accommodation.