USI Funding Vote Options

VOTE Choose how we

FUND HIGHER EDUCATION Your Students’ Union currently fights for college to be 100% Exchequer Funded (‘Free fees’). For the first time ever, students all over the country are being asked: what do you what you want us to fight for? How do you think college should be funded? Please take a minute to look at the options, and vote online next week at UsiVote.com

The Options

There are 6 basic options

1 4

Postgraduate Tax (pay extra tax after college)

Student Contribution (currently €2,250)

2 5

100% Exchequer Funded (Free Fees) Student Loan Scheme (repayments after graduation)

3 6

100% Upfront Fees (Full fees)

None of the Above (an option not listed here)

Please see overleaf for a full explanation of all six options.

1.

Postgraduate Tax

If a graduate tax were introduced in Ireland, students would not pay any fees upfront but would repay the government through a new tax levied only against graduates.A graduate tax could be implemented in two ways. Firstly, a graduate would repay an additional rate of tax for their entire working life, which could mean repaying much more than the cost. Alternatively a system could be implemented where a graduate would be asked to repay for a set period of time perhaps 15 years or until such as they have repaid a certain percentage of the cost of their course.In a graduate tax model similar to the second option the National Union of Students in the UK calculated a teacher would repay approx 7 pounds a week.

PROs

CONs

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• • •

• • • •

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Education is accessible as it is free at the point of entry and there is no upfront cost.

Additional resources may become available for maintenance grants as the state no longer needs to cover the student fee contribution.

Additional revenue may be available to colleges and/ or the Exchequer to invest in additional facilities or additional supports to students.

Repayments can be income contingent and interest free.

Graduates have no personal debt. This resolves the issue of students avoiding Higher Education as they are debt adverse and also the issue of graduates being unable to obtain mortgages, car loans etc. due to personal debt burden.

Repayments are based on the graduate’s earnings rather than their parents as is the case under the current means test.

2.

• • •

Graduates may emigrate to avoid repayments.

Significant administrative and implementation cost.

Additional revenue is collected through general taxation and may not be spent on education.

Graduate tax could involve rolling Exchequer borrowings and debt servicing costs which may not be possible in the current climate.

There may be a significant time lag before any additional funding is available to colleges as graduates must graduate and begin earning before repaying.

In some graduate tax models graduates repay for life and thus repay the cost of their programme many times over however; this may be negated by introducing a maximum length of payment and/or maximum repayment amount.

100% Exchequer Funded

Proponents argue that Higher Education is a public good and having increased numbers of graduates benefits all of society; economically and otherwise. They argue that third level education is increasingly becoming a basic requirement for many professional careers; similar to how second level was viewed a generation ago.

Opponents question the viability of such a scheme in the current financial climate.

It is likely that more EU students would come to Ireland to avail of such a scheme if it were implemented, given the increases in applications from the UK this year.

PROs

CONs

• •

• •

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Fees are not a barrier to access.

Students do not make course decisions based on the cost of courses and instead select a discipline of genuine interest.

Graduates will, on average, get better jobs, generate more economic activity and pay on average 70% more tax over the course of their working lives than nongraduates

• • • •

Other barriers may still exist.

Funding for maintenance grants may be threaten and re-diverted.

No additional revenue will be available to colleges and/ or the Exchequer to invest in additional facilities or supports to students.

In the current climate Exchequer is unable to cover cost.

No additional funding will be available for maintenance grants.

Likely increase in general taxation to cover ongoing costs.

3.

100% Upfront Fees

The re-introduction of upfront fees transfers the responsibility for funding Higher Education from the Exchequer to the individual student/family and may release Exchequer funds to be spent in other areas of the economy. Students would be charged fees in line with the full economic cost of their courses. In essence this would be a return to the position in universities prior to the introduction of the ‘free fees’ scheme. The additional funding generated by the introduction of upfront fees would likely be available immediately to Higher Education institutions to invest in additional infrastructure and services. Internationally, where upfront fees are charged to students a provision is made to provide scholarships/bursaries/grants, designed to offset access issues, but the decision to provide these would depend on the individual institution - there would be no obligation to provide a scholarship programme.

PROs

CONs

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•

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Significant additional revenue will be available to colleges/universities and/or the Exchequer to invest in additional facilities or to deliver additional supports to students.

Reduces disparity between different categories of student e.g. full and part-time undergraduate students would both pay fees.

• •

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4.

Potential for student migration i.e. students choosing to study abroad.

Additional revenue may be retained by central Government and not used for additional facilities or services.

Significant equity of access issues for students from low and middle income backgrounds - fees may only be affordable to students from wealthy backgrounds and would result in access issues.

Means tests are based on the parents incomes and not the future income of the graduate.

Student Contribution

The current system for full time undergraduates of paying a percentage of the costs of their education by means of the Contribution Charge spreads the costs of Higher Education between the Exchequer and the student/family. The Contribution Charge, formerly the Registration Fee, was introduced with the ‘free fees’ scheme in 1996/1997. Initially standing at €190 per student, in 2012 the charge will be €2,250. The Minister for Education has announced that this could increase to €3000 by 2015.

Students below the threshold for the Maintenance Grant do not have to pay the contribution but those just above receive no assistance.

PROs

CONs

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•

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The means tested maintenance grant system ensures that students from lower socio economic backgrounds have the contribution paid on their behalf.

Students in all courses pay the same contribution irrespective of course costs ensuring that students who opt for more expensive courses do not suffer a financial penalty.

• • • • •

No additional revenue will be available to colleges or the Exchequer to invest in additional facilities or supports to students.

Difficulties in affording the increased contribution could affect access rates.

The means test is based on parents’ income and not future income of the graduate.

Disparity where full-time undergraduate students pay the contribution while part-time and taught masters students pay full upfront fees.

It is likely that the contribution will continue to increase.

In the current climate Exchequer is unable to cover cost of additional students and will likely have to implement a cap on student numbers.

5.

Student Loan Scheme

Whilst there is no guarantee as to how a loan scheme would operate here, we can look at examples of such schemes across the world to assess likely scenarios. Most loan schemes operate on the following basis: • • •

The State puts in place a loan scheme for all students without a guarantor.

The student pays no money upfront, with no repayment before graduation.

Many loan schemes require no payments unless the graduate’s income is above a threshold.

PROs

CONs

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•

• • • •

Education accessible as it is free at the point of entry and there is no upfront cost.

Additional resources will be available for maintenance grants as the state will no longer need to cover the student contribution under the existing system.

Additional revenue may be available to colleges and/ or the Exchequer to invest in additional facilities or to deliver additional supports to students.

Repayments are income contingent, graduates only repay what they can afford based on earnings after a threshold.

Repayments are based on the graduate’s earnings and not their parents as is the case under the current means test.

• • • • • • •

6.

Given the current public finances and Ireland’s debt to GDP ratio, Ireland would struggle to set up the system without outside help.

Students from Lower income groups are more likely to be debt adverse and avoid Higher Education to avoid debt.

Graduates sometimes emigrate to avoid paying the loan, thereby leaving the system with a significant shortfall Graduates carry significant personal debt burden potentially leading to issues obtaining mortgages, car loans etc.

Graduates may emigrate to avoid repayments.

Significant administrative and implementation costs.

There may be a significant time lag before any additional funding is available to colleges.

The graduate’s debt may be subject to annual interest.

None of the Above

If the position of none of the above is successful, delegates will have decided that none of the five options for are acceptable as USI’s funding position.

Voting takes place between 14th to 20th May 2012 at

UsiVote.com