[Article] O'Keeffe signals preference for student loans

Only saw this now...

http://www.irishtimes.com/newspaper/ireland/2009/0706/1224250105030.html

O'Keeffe signals preference for student loans

SEÁN FLYNN, Education Editor

Mon, Jul 06, 2009

THE PROSPECT of parents and students being asked to pay over €5,000 in “upfront’’ college fees has receded after Minister for Education Batt O’Keeffe yesterday signalled his backing for a new student loan scheme.

While the return of fees is one of five options in a discussion document – due to be circulated to Cabinet Ministers this evening – Mr O’Keeffe favours student loans and will not push for fees, according to education sources.

The return of fees, first floated as a possibility by the Minister last year, is strongly opposed by Green Party Ministers. Parents will not be liable for any upfront payment under the Australian–style student loan scheme proposed. Instead, the burden of payment shifts to the students themselves.

Under the scheme, students take out a loan, repayable once they reach a certain income threshold after graduation.

At one stage, there was speculation that parents could face fees of more than €5,000 for general arts and business degrees and even more for expensive courses like medicine.

While parents will welcome the decision to abandon upfront fees, the move will increase pressure on the higher education sector in the Republic, already poorly funded by international standards.

If the loan scheme proceeds, it will be three to four years at the earliest before a new income stream is available to third-level colleges. The Cabinet will not make a formal decision – based on the O’Keeffe options paper – until later this year.

If approved by Cabinet, the new student loan scheme is likely to be introduced in September 2010. Students, who are already in higher education, will not be liable for any new charges. But they will continue to pay the student registration charge of about €1,500.

Sources say Mr O’Keeffe wants his Cabinet colleagues’ observations on the options before he formally presents his own recommendation later this year.

The much-delayed report – originally due to be circulated before the local and European elections last month – sets out in detail various options ranging from the reintroduction of tuition fees to a student loans facility or a combination of both.

The student loan model – or a variation of it – is used in Australia, New Zealand and Britain.

Research conducted three years ago in the Republic indicates that graduates earn on average about 70 per cent more than those who do not proceed to college.

But graduate unemployment – less than 3 per cent at the time of the survey – has since soared.

The Union of Students in Ireland claims the average student in Australia finishes university with a $12,000 debt, which takes about a decade to repay. It says almost one third of the multibillion dollar debt owed by university students has been written off by the federal government as a bad or doubtful debt. In the US, the default rate on student loans has increased to about 7 per cent.

Mr O’Keeffe has said his recommendation will be grounded on the principles of equity, access and affordability and that the free fees initiative had little impact on getting more people from disadvantaged areas into college.

Later this year, the higher education strategy group, chaired by economist Dr Colin Hunt, will publish its blueprint for the development of the higher education sector over the next two decades.

© 2009 The Irish Times