By the way, this side of the Irish sea, that higher education report… July 12, 2016
Posted by WorldbyStorm in Uncategorized.trackback
…doesn’t offer much by the way of comfort.
Minister for Education Richard Bruton has said he hopes a consensus can now be built as to how to fund higher education into the future.
Speaking at the launch of a report on funding for the sector, Mr Bruton declined to outline which of three options outlined in the report was his preferred one.
He said clearly the Government could not deliver on this issue on its own and that a consensus was needed.
Given the three options no wonder he’s keeping quiet for the moment.
The first is the abolition of the current student contribution of €3,000 and a substantial increase in State funding to make up the shortfall.
This is the model used by many European countries.
The second is the maintenance of the current “hybrid” system.
This, according to the report, would require a significant increase in State funding, from the current 64% of the overall cost to 72%.
The proportion currently paid by the Irish State falls well below the EU average of 79%.
The third option is the one that has received the most focus thus far.
It envisages the introduction of a “study now, pay later” student loan system.
This would be income contingent, with students repaying the cost when they reach a certain earnings level.
Students and their families would also have the option of paying for their education up front.
But as noted in the report, FG’s instincts are the last. FF is agin it which probably means a continuation of the status quo. And it’s clear there’s an aversion to the first option. Indeed pieces like this from Carl O’Brien in the same paper last night underscore how the narrative is shaped. Despite Ruth Coppinger of AAA amongst others pointing to the need to fund education from progressive taxation he writes entirely straight faced about how:
Almost all parties say they favour a “free” third-level system and want to abolish the registration charge, but are less clear on how, exactly, this will be funded.
He runs through a list which seems to suggest that such an approach, one the IT above admits is the norm in ‘many European countries’ and hardly beyond the beyond in terms of radicalism, is unfeasible. For…
It would require the State’s contribution leaping from 64 per cent to 80 per cent of a higher education system which is set to grow by about a third over the next 15 years or so.
This would require billions of euro of sustained investment at a time when there is huge demand of investment in health, housing and public sector wages.
Raise taxation – anyone?
In any case he concludes by saying:
Against this backdrop, a student loan scheme – where education is free at the point of access – doesn’t seem such an unpalatable idea. But political parties seem unwilling to go there.
And so, and so the options clearly aren’t options at all, but are organised in one direction.
Two or so cheers though at least for the report pointing to some basic problems with the system as currently structured. For example:
The report finds that the full maintenance rate, which is paid to the poorest students, only covers between 30%-35% of actual student living costs.
And the latter point here isn’t bad either:
The chair of the Expert Group on Future Funding for Higher Education has said increased investment in higher education and apprenticeships is crucial in order to move the country on from the crisis of recent years.
Higher education encompasses many forms, that’s important to keep front and centre.
The Cedar Lounge Revolution 
The UK can’t be part of that EU average of sate contributions to students fees, surely!
Of course student finance in the UK is a mess. Massive personal debt, much of which will not be repaid and a crisis tehrefore looming down the pike. And very expensive education. I would have thought a great opportunity for Irish universities to make a killing from the many EU students who want to learn in English..
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Indeed. And perhaps attract back some academics who want to stay in the EU? 🙂
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[…] “… doesn’t offer much by the way of comfort. ‘Minister for Education Richard Bruton has said he hopes a consensus can now be built as to how to fund higher education into the future …'” (more) […]
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“Almost all parties say they favour a “free” third-level system and want to abolish the registration charge, but are less clear on how, exactly, this will be funded.”
I actually think that the comment that those people/parties (and I’d include myself among them) are being unclear about how free third-level education will be paid is a reasonably fair one.
Saying you will do so through progressive taxation is a perfectly valid argument, but it’s also vague. Through income tax increases – on who and for how much? A wealth tax? Increasing corporation tax? Reallocating funds from somewhere else?
And since those who argue for paying for free third level education out of progressive taxation are also arguing to use the same approach to solve problems in many other areas, including housing and health, just how much will just which taxes have to go up to meet these commitments?
Just to reiterate, I would strongly support the position that third level education should be free and I do agree with your broader point about the narrative being structured in the article.
But I think it’s fair to say that anyone who suggests a funding commitment of this size will be met by ‘progressive taxation’ is not being clear.
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The ‘you have not fully worked this out’ is a cheap argument and a red herring.
Even with the introduction of ‘income contingent loans’, the State would still have to find something in the range of €700m in additional funding by 2030. Where is Richard Bruton proposing we pull that from? The fiscal space, maybe?
Similarly, income contingent loans have numerous issues: what will the interest rate be? Is it really a feasible funding method given the increased trend towards insecure and casual employment? Will the loans be included in bankruptcy and insolvency proceedings?
– How do we deal with graduates who go to work overseas (after all students can be a peripatetic as the idle rich, who can seemingly avoid wealth and income tax with ease)?
– Many third levels have started to tack on non-optional additional charges (to pay for membership of a sports centre or IT charges etc.). Will the loan cover these non-optional charges? What mechanisms will we have to deal with the very likely price inflation that third levels will implement following the introduction of the scheme?
– Will the scheme be entirely taken on by the State or will there be private sector involvement?
– Will all tuition fees be covered or just undergraduate? How will we deal with part-time and mature students?
– Under what conditions will the debt be written off?
Given the above, when I see complaints that Ruth Coppinger has not developed a fully worked out model for funding via taxation (i.e. Nordic model), I just roll my eyes.
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Most of those questions (possibly all) and a great many more are addressed in Appendix Three of the report to far more detail than ‘raise taxes’.
Secondly, there is a difference between someone suggesting a new funding model (for example, a student loan) for discussion and someone referring to an existing fundraising mechanism.
In the former, it is more legitimate not to have all the answers – it’s a new funding model, no one would have them – and in this case they’re proposing an idea for more discussion.
In the latter case, it’s easier to make proposals and provide detail because you’re using tax-raising systems that are accepted and reasonably well understood.
I’d also like to make clear I wasn’t having a pop at Ruth Coppinger rather anyone, of any party, who thinks a bumper-sticker slogan is a coherent policy response to anything, in this case the funding of third level education.
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Those are fair points Jonah you raise. I’d think my answer would be increased income taxes. Nor is that beyond the beyond given that at the last election but one the LP sought to address the crisis with significantly higher taxation than FG. Now we know where that went (and there are valid discussions to be had over the nature and impact of the USC as an effective higher rate income tax), and perhaps they were insincere from the off, but the point being that increased personal taxation is not in and of itself an unreasonable or particularly radical way to fund education, health, capital projects, public housing etc.
There are other mechanisms, upping the effective rate of corporation taxation (or rather ensuring that nominal rates are adhered to), increasing inheritance taxes, and so on. But to address this from a slightly different tangent in Revenue we have an excellent income collection structure that stretches across and through the state. I’m always puzzled as to why people would want to replicate that in part or whole.
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The whole story is another shameful example of attempting to “force the card” of student loans no matter what. Time after time we’ve had pundits wheeled out to present loans as the obvious solution – despite the fact that they have been a complete mess in the US and UK, even on simple economic terms (they generate huge amounts of bad loans which are probably never going to be recovered, as well as forcing large numbers of graduates into emigration to avoid paying the loans).
LP and the like long ago bought into the argument that because 3rd level education is classed (though far higher proportions of Irish young people go to college than in many western states, including our nearest neighbour, and we have relatively good proportions of mature students) it is iniquitous to put money towards it as against primary and secondary. A bit like arguing that you shouldn’t fund A&E departments because cancer and heart attacks is what will carry most of us off – but sounds clever when proposed in the student bar.
Thankfully this same high level of participation does probably make student loans politically unfeasible (not least if there is an election in the offing). One of the few things left of the social contract under neoliberalism seems to be the promise that little Johnny and Mary can go to college and hope for a better life than their parents – threatening to take that away will not be a votewinner anywhere outside Foxrock, methinks. And there’s little enough prospect of the kind of government majority even with another election that could just go ahead and do it.
My best guess is that they will just long-finger it for now, keep up the dripfeed of opinion pieces about how we have to “make hard choices” (translation: accept student loans) and slide it in at some point in the future when they have a solid majority.
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People are already repaying their college costs according to their means – it’s called progressive taxation, and it’s why means-testing is just a massive waste of time and money.
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Of course on a grimmer note it is almost certainly the case that people are already taking out loans for things like postgrad fees and living expenses (with credit unions if not with banks).
Tell it not in Gath and proclaim it not in the streets of Ashkelon, lest the daughters of the Philistines rejoice and use it in Dail debates.
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I think I’ve made this point before, but any student loan system will involve at least a billion euro per year and that figure, cumulatively, will rise over time as interest accumulates and the ‘loan book’ expands.
Under EU fiscal rules there is zero chance that this will be allowed anywhere near a government balance sheet.
So it will be an ‘Irish Water’ style agency administering things. Millions in the set up etc.
Or, given the political power of the banks here, there will be pressure for the banks to provide ‘packages’ to students.
Questions then arise. If little Johnny or Mary have a parent whose credit record is abysmal (lots of them around nowadays) will little Johnny or Mary qualify for a loan? Initially, yes to make the system look ‘fair’ then, as with the in charges etc, loan availability will become more and more restricted.
The politicians will then just wipe their hands of it, like they have done with the bin charges, with excuses like ‘we’d love to do something and we fully sympathise, but, lookit, our hands are tied. Brussels wouldn’t allow us to intervene’.
Then the repaying questions arise. Someone who has a few bad years in their twenties and falls behind on their repayments, go onto the Irish Credit Bureau’s list of defaulters, then finds themselves not eligible for a mortgage etc.
The whole thing has the smell of an omnishambles.
Of course, there is huge potential for a boycott campaign of any loan system? That would be a real threat to the state given the sums involved.
However, in an ‘Alice in Wonderland’ society like ours, where pundits report with straight faces economic growth of 26%, all and any objection to the loans model will be pooh-poohed.
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+1
Of course mature students who for whatever reason do not have a perfect credit record will also fall foul of the loans system.
Meanwhile graduates from countries where pursuit of student loans has been handed over to collection agencies (Canada is one example) have a strong incentive to leave the jurisdiction and take the benefit of their education elsewhere.
Incidentally whatever the payment model, 3rd level education is still massively subsidised by the state, as it should be. The real cost, as charged to non-EU students (which it shouldn’t be but that is another story) is around 12 – 13k per annum.
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The full impact of the loan scheme, on top of fees of 9k has yet to be felt here in England – the first grduates to carry the full whack of debt graduated last year, so it’ll be a few years yet before we see the figures.
Which leads me to suspect that an Irish govt. will try and get such a scheme off the ground as quickly as possible
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For comparison: the US now has a total student debt of $1.2 trillion (yes, trillion), second only to mortgages in terms of consumer debt and a real brake on purchases of things like houses and cars that drive growth in mainstream models. About 1/4 of these are “in delinquency or default”. Here’s a non-radical take on the scale of the problem: http://www.marketwatch.com/story/americas-growing-student-loan-debt-crisis-2016-01-15
In Britain, 3/4 of students are unable to pay off their loans and the combination of student debt writeoffs plus net lending is close to equalling the entire 3rd level budget. http://www.independent.co.uk/news/education/education-news/student-debt-to-cost-britain-billions-within-decades-9970340.html
If ever there was a case of ideology-driven policy, this is it.
Of course the “experts” consulted on this process – like those on the Irish Water commission – do not include those involved in running the systems common in many EU countries where fees are zero or close to it. That would be too easy.
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I’ve been reading these ‘student loans the way to go, say hand-picked experts’ reports and subsequent media coverage since I worked for a students’ union, which is longer than I care to recall. The bullshit arguments wheeled out are always the same, and always reported without any scrutiny or critical analysis, even though it would be an afternoon’s work to get the relevant data for the US, the UK, Australia etc. together. The same afternoon’s work could then be put on file and used again every couple of years, with a few minutes to update the stats, but that seems to be too much to ask.
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