Dr. Shaen Corbet:

The rate of growth is assumed to be 1%. This is a highly unlikely scenario, particularly as a shock such as that experienced in the recent economic collapse would render the ICL system in immediate danger due to two significant side effects. One is raising the necessary capital and the second is student non-repayment due to a host of reasons, such as unemployment and wage reductions, as witnessed during the recent financial crisis. There is also evidence to suggest that there exists a functional ICL system for postgraduate education across most education facilities. This appears, based on these preliminary estimates, to merit further investigation.

Five key characteristics increase the probability of negative outcomes should an ICL system be implemented. The first is emigration, which has presented itself to be one of the major issues associated with the New Zealand system, which has manifested itself into approximately NZ$1 billion in overdue overseas student loans. The second issue is the non-progression rate. Further research is necessary to estimate the potential effects of non-progression on a potential ICL system. Currently, it is assumed to be 21% of IOT students and 11% of university students. The third issue is based on salary shocks. One substantial issue identified within wage shocks is they do not influence each sector equally. Analysis of the earning hours and employment cost survey indicates the extent to which there has been inequality in wage recovery. Continued wage restoration to pre-crisis levels has not presented in the education and health sectors by approximately 5.7% and 6.2%, respectively. The fourth issue is based on potential securitisation to generate liquidity. In the UK in late 2013, it was widely reported that a company called Erudio Student Loans had been named the successful bidder on the 1990 to 1998 loan book, which was estimated to be worth £890 million. It eventually sold for £160 million, a discount of approximately 82%.

Another key issue is economic contagion. In mid-2016, theFinancial Timesreported that following a dramatic increase in university fees in the UK, student loan debt had increased by £12.6 billion in 2015-2016, standing at £86.2 billion. This increase in fees has a direct effect on household that, reiterating my earlier point. There are some key points to note. Policy options have a shelf life. This may have worked between 2003 and 2006 during the Celtic tiger era but it may not have been acceptable between 2008 and 2014. We do not know at the minute; more research is needed.

I previously worked as an equity and commodities trader and I also worked with in the financial stability division of the Central Bank. I teach postgraduate classes in DCU in financial theory, derivatives and financial engineering. Student conversations these days are based mostly on living conditions and commuting and they are not generally about fees. It is about the cost of living associated with going to college. We must continuously focus on our high taxation and household debt when compared to our European counterparts. We do not have much space to increase household debt further and certainly not in line with the UK estimates and the way its system has expanded.

In my time at DCU, we have noticed the pressures on our system. At our business school, for example, under the leadership; and direction of Professor Anne Sinnott, we have improved efficiency and quality, which has been represented in our recent Association to Advance Collegiate Schools of Business, AACSB, accreditation leaving us in the top 5% of the international business schools. This occurred in the midst of the funding crisis. This presents evidence that some university departments have adapted to circumstance. This crisis is about adaptability and resource management combined with funding. In line with funding options, perhaps solutions could be found in the efficiency and performance of the system as a whole. The question is: who is more important - the student, the educational facility or, indeed, the Exchequer?

Based on our estimates, we find that an ICL system would be a risky course of action for Ireland. It has the potential to generate significant liabilities for the Exchequer while generating future economic distortions through the additional debt imposed on our graduates. Further research is necessary to test potential side effects of such a system. We must remember that this is an education system and not a banking or lending system. We must accept that an ICL system would modify the significant social planning objectives that have been put in place and we must note that it is reliant on economic stability and cannot be guaranteed in the long term. As identified across other ICL systems, there are inherent issues for a variety of reasons, including emigration and the ability to absorb further unsecured debt. We conclude that seeking a single panacea to higher education funding in the form of ICLs may not be an appropriate choice due to the system's vulnerability and certain social and economic characteristics which are found in Ireland.