Wednesday, 18 January 2017
Third Level Funding
31. To ask the Minister for Education and Skills if he will take on board concerns represented by the Union of Students in Ireland and other representative groups if an income contingent loan scheme is established on the basis of the Cassells report; his views on whether it is a viable solution to third level funding as a graduate debt of more than €20,000 will create a two-tier system of higher education, furthering inequality in society; and if he will make a statement on the matter. [2015/17]
The question relates to the Cassells report on funding for higher education. I wish to hear the Department's views on a proposed student loan scheme that could potentially add €20,000 of debt to graduating students.
The report of the expert group on the future funding for higher education sets out a number of funding options for the sector with income contingent loans being just one of those options. Other options include a predominantly State-funded system or a State-funded system supplemented with continuing student fees.
As the Deputy is aware, the report is currently with the Oireachtas joint committee for consideration where each of the funding models will be examined and the process will include input from all stakeholders. I understand the Union of Students in Ireland is one of the groups which has made a submission.
It will be important to obtain political and societal consensus on achieving a sustainable funding model for the higher education sector in the future and my Department and I continue to work with the committee as it undertakes this important job. However, it is important to recognise, as the Cassells report has done, that doing nothing is not an option and that other measures to improve equality of access would also be necessary to complement any of the options outlined.
Funding overall for the higher education sector is a key concern for me, particularly in light of the additional pressure that will fall on the system over the next decade or so. That is why I am pleased that I have for the first time in nine years secured additional funding for the sector with an extra €36.5 million being made available this year and a projection for the coming years of increased resources amounting to €160 million in the next three years.
This includes an increase in the funding available to students from disadvantaged backgrounds and other under-represented groups to assist them in overcoming financial barriers to accessing and completing higher education.
In addition, in budget 2017, the Minister for Public Expenditure and Reform and I announced a policy review with the aim of designing and implementing a sustainable and predictable multi-annual funding model for higher and further education and training involving increased employer and Exchequer contributions from 2018. The review will be undertaken as part of the overall response to meeting the anticipated skills needs in the economy over the coming years in line with the policy framework set out in the national skills strategy. It will include an analysis of the business case for enhanced investment in the higher and further education and training sectors and of the most effective funding mechanisms to deliver outcomes in respect of our ambitions in this area. In this context, it will identify key elements of the new funding model and of the expected impacts, including those on employers. It will also include consultation with stakeholders. It is expected that the review will be published by the end of April 2017 and will complement the ongoing work by the Oireachtas Committee in regard to the Cassells report.
I thank the Minister for his response. I am bit confused about the review he outlined. It is happening in parallel with the work of the Oireachtas committee in respect of the Cassells report. It seems it will cover much of the same ground. The question will relate to a student loan scheme that is a consideration. It appears that the view of all the major parties is that the student loan scheme is the way to go and that kicking it to the committee is a way of trying to lengthen the decision-making process. In light of the fact that in the UK in 2015, student loan debt was £86 billion and the Union of Students in Ireland has estimated that under a student loan scheme, a graduating student could pay anywhere between €100 to €150 per month in student debt repayments, I want to find out whether the Department is actively considering a student loan scheme and whether the review will look at rolling it out.
It is not true that we are duplicating because any envisaged future outlined by Peter Cassells and his committee would envisage an increased contribution from the Exchequer and an increased contribution from employers. We are advancing that with an April deadline so that we are in a position come next year's budget to indicate a future path for the funding of higher education. In this year's budget based on Exchequer resources alone, we have indicated a three-year path of increased resources. There is no doubt that Peter Cassells's report has also thrown up the issue of whether that will be sufficient and whether we need to envisage changes in the way we now fund higher education.
As the Deputy is aware, his proposals envisage that there will be no fees for someone going into college so it would be free at the point of participation but that there would be a recovery thereafter. He also points out that it would not be like the UK model but would be modelled more on the Australian system. It is important that Members get the chance to tease out the pros and cons of that approach so that we can develop an agreed approach to this issue if that is possible if we feel that this is the way forward and if not, what the alternative would be. I acknowledge that there are difficulties with a loan model but I also see, as the report points out, that there are considerable attractions in it. We need to do the work that the Oireachtas committee is undertaking. I hope we will be in a position come next year's budget to indicate a consensus view as to how we should proceed on the issue.
Australian students graduate with up to $50,000 in debt and I know there are problems there with repayments. The overall point about a student loan scheme is that it represents a commercialisation of the third-level educational process, which I do not think is of value. How would the Department prevent that and prevent banks from capitalising on and looking at students as economic units they can make profit out of rather than looking at the educational benefit that students who have been educated at third level can contribute to our society and economy in the future? Is that something the Department will give active consideration to rather than just looking at the economics of a loan scheme?
I do not think this is envisaged as some sort of commercialisation. At the moment, people pay fees so there are student contributions and students or their parents must find them while they are studying. The report suggests that we look at an alternative where people do not pay anything while they are studying but there is a recovery when their income goes over a certain figure and that this is how they would contribute to the cost of their education. It is not applying some commercial model. It is using a different profile of collecting a contribution from students who participate. The report has pointed out that people who complete a third-level education have considerably higher earning capacity. That is the issue we need to assess. There will be different views in the House. I know some parties have very strong views. The Union of Students in Ireland has a view while others within the universities have a different view. It is our job as an Oireachtas to tease out those views and reach a consensus if that can be reached.