Dr. Shaen Corbet:

I thank the committee for inviting me here today. I have worked with Dr. Larkin to present our estimates of how a potential ICL system would perform if it were introduced in Ireland. We have conducted an analysis of the 2014 to 2015 graduating student cohort to investigate the viability of a potential ICL system where the results of some of the analyses which we have conducted are contained within our submitted report. We will present evidence of a variety of scenarios in the near future and wish to stress that our estimates are based on a working methodology.

I will not go through the results in detail. Instead, I will give a broad overview of our key findings to date and the evidence of the risks and issues that have been identified in international ICL systems. We are faced with the dilemma of implementing a system that provides equity to all participants, that promotes student access and which will not impose losses upon the Exchequer. ICLs possess the capacity to generate affordability of repayments. However, we focus upon the potential costs and specific risks that are contained within the system, particularly as ICLs are usually guaranteed and in some cases directly funded by the state. A potential ICL system must recognise that we are losing a significant proportion of our most qualified students to emigration and that some of our academic institutions possess substantial non-progression rates. We must note the student loan growth in the UK has been associated with a substantial increase in household debt. That has occurred as recently as late 2016. UK university fees have now increased and have been capped at £9,250. It is estimated that the average graduate will now leave higher education with approximately £44,000 debt.

We must then consider the potential scenario of a couple, for example, who would leave college with approximately £88,000 debt and what a bank manager would say should the couple seek to obtain a mortgage. It would be perceived to be highly problematic and we would hypothesise that this type of debt could manifest itself into episodes of real economic shocks, perhaps in the property sector in the near future, without considerable research and effective planning. We must also consider research by the Institute for Fiscal Studies in the UK, which recently concluded that approximately 70% of the graduating students there in 2015 were expected never to finish repaying their student debt.

Our updated methodology, presented today, utilises available pre-crisis datasets to identify the correlation between age and salary, which have been enhanced through the inclusion of data sourced from Irish employment vacancy sources, consultation with recruitment companies, student bodies, university career advisory services and publicly available data to estimate Irish salary growth using recentered influence functions, RIF, among a number of other methodologies. The estimated salary distributions are then modelled upon gross earning ventiles which are separated by the course the student has completed, as denoted by the ISCED field of study. These ventiles incorporate specific information based upon the gender, level of education and facility in which the student attended. We have selected a wide range of potential career avenues that students within each discipline are considered to undertake, through analysis of university course advertisements, national educational advisory sources and further aided by the Georgetown University report from 2015, The Economic Volume of College Majors, from which we could allocate a 20-year earning estimate based upon our estimates of graduate salary. As a robustness test, our modelled salaries are found to be in line with the recent HEA report, What do Graduates do?, based upon the graduating cohort of 2015. We have modelled our baseline ICL repayment threshold on the median graduate salary, which is estimated to be €25,000, when considering the number of students graduating within each discipline. The assumption that all graduates can complete 20 years of employment was made. In terms of age, we are starting with baseline graduates.