Presentation to the Oireachtas Education Cmte

here is the presentation I gave to the members of the joint oireachtas committee on education today. Myself and Shane got asked numerous and intelligent questions from the members and i'm sure these will be available online at www.oireacthas.ie.

The education committee agreed to send a letter to the minister asking him to consider putting fees as an agenda item for the new national strategy on education.



USI as an organisation are fundamentally opposed to the return of tuition fees under any guise. Our organisation is opposed to the commoditisation of education and believes fees would act as a barrier to third level education for many
students.

Investing in education is good for the learner and for society as a whole. The only barometer by which one should be measured, is potential, not ones potential to pay.

In 1996 tuition fees were abolished. Since then, Ireland has witnessed a surge in the numbers of students entering third level education. In 1980 this access rate stood at 20% of 17 - 18 year olds while in 2004 it had reached almost 55%. In the college year 2006 - 2007, there were 153,606 individuals in education in the Higher Education sector. The last thirteen years have seen a dramatic rise in the level of participation in tertiary education.

In 2008, the Higher Education Authority produced the National Plan for Equity of Access to Higher Education 2008 - 2013, designed to dramatically increase the numbers in further and higher education. The plan set a target of 72% for national participation by 2020 and at least 54% in each socio-economic group. Restricting access to third level education through the reintroduction of college fees will result in these ambitious targets not being reached.

It is apparent that a proposal on the re-introduction of college fees will be tabled for cabinet discussions within the next four weeks. We urge the government parties to examine all options of funding the sector before making a decision on student fees. It is our view that all stakeholders should come together and agree a long term funding model that will protect access while ensuring the funding requirement of the sector are met.

The cost of college in Ireland has been put at EUR38,000 for a four year degree, a figure which does not include the EUR600 increase in the registration fee increased in Budget 2009, which will make that average total over €40,000. The argument put forward that only those on higher incomes would pay fees has been proven false. Figures from the Minster of Education & Science’s economist show that, at most, it would raise less than EUR30 million per annum. This is before tax relief on tuition fees of 40% are included. Given the nature of the chronically underfunded tertiary sector, this amount will have no real financial impact and any potential benefit would be lost as thousands of students are forces out of Higher Education. If fees are introduced, they will have to be extended to all learners, as they simply would not raise enough money. This would completely undermine the OECD’s conclusion that Ireland is providing the most equitable access to higher education.

Visit the IDA website and you will see how important an educated Irish workforce is in attracting outside investment. The website boasts that the educational system in Ireland meets the needs of a competitive economy. The figures stated showing a decisive lead over countries that restrict the access of people to education through tuition fees; namely the UK and the US. Also, the organisation promotes Ireland’s higher educational achievement. Using this indicator, Ireland is markedly ahead of countries like the UK and Germany when it comes to the % of population that has attained at least tertiary education, in fact the Irish have double that of Germany.

The source of these figures: IMD World Competitiveness Yearbook, 2008.

Restricting our countries economic competitiveness during a recession would elongate the economic trouble for our country. Due solely to the free fees scheme, the IDA continually promote that the Irish skilled workforce of science and technology graduates in the 20 - 29 age group is twice that of the US and three times that of Germany.

Despite these figures and the obvious economic benefits of tertiary education, Ireland has consistently under spent in tertiary education. The OECD puts the average level of investment per student in tertiary education at $11,512 while in Ireland $10,468 is spent. In 2005, 1.2% of Gross Domestic Product went on further and higher education, down from 1.5% in 2000 and even less than in 1995. Graduates contribute an average of 70% more to the public exchequer through taxation, both direct and indirect, than those who do not attend further or higher
education. By raising our investment to OCED levels, we can stimulate knowledge, innovation and the economy. This can and should be done through progressive taxation, as this is how modern societies funds essential public services.

USI fears that college fees will stifle Ireland’s economic recovery and growth by restricting access and burdening graduates with large debts.

A version of tuition fees currently being examined is the Australian model HECS. The Higher Education Contribution Scheme (or HELP as it is known today - it has a better ring to it) is a graduate tax. Students have their fees paid for up front by the government and then pay back through extra taxation the amount owed. The Australian system has grown so complex that it needs circa AUS$5 billion to overhaul and comes as a response to a 272 page review of the system. HECS as a system is broken and flawed. Originally created to increase access, it has had the opposing affect.

The average student finishes university with a $12,000 debt, which takes about a decade to repay. Almost one-third of the multi-billion dollar HECS debt owed by university students has been written off by the Federal Government as a bad or doubtful debt. The figures, supplied through Australian Senate Estimates, predict that $2.9 billion of the $10.2 billion owed through the Higher Education Contribution Scheme for university fees is unlikely to be repaid.

This Tax is indexed at rate equal to the consumer price index. The tax is repaid through automatic deductions taken out using the same system as tax (PAYE) once over the minimum repayment threshold, which is currently just over $38,000 or €19,000 per year. After this threshold, a percentage of your entire salary is automatically deducted; not the amount above the threshold as happens for income tax. Unfortunately, many young Australians have no idea exactly how the repayment of this debt affects them day-to-day. Is this a loan that is easily paid off? How long will it take?

For someone earning $40,000 a year, which happens to be just over the repayment threshold, the “normal” take home pay is $2720 per month or $628 per week. The HECS repayments add up to an extra $133 per month, or $31 per week. The figures are downhill from here. Someone earning $50,000 per year has $229 per month ($53 per week) taken out; a salary of $60,000 means $310 per month or $72 per week is deducted. In other words, a 50% increase in pay means a 130% increase in the amount deducted. This means over a year the average graduate can have anywhere from 23% to 28% more taken out of their pay. The system is inequitable, as built into the system are provisions for those who can afford to pay upfront the cost of tuition fees get an overall reduction of 20% of the total cost, leaving those that cannot afford to pay higher taxes.

Many students will never earn enough to repay their loan. Young Australian graduates are finding it harder and harder to buy a home and start a family because of the very high levels of HECS debt that they have to endure. No research has been carried out to examine the impact that going into a large amount of debt at a young age has in the long term. Also, given the economic outlook, the expected earning potential for future graduates may be less than in the past but a HECS style debt incurred would increase.

Should a graduate tax system be implemented it would be upwards of a decade before any cost would be recouped by the state, so the argument that this system would be able to fund the sector is also flawed.

The model used in the UK is one of student loans, where a government back loans group loans the students the finance to attend college. The figures here are startling; More than 59,000 are in arrears, with bad debts standing at £162.5 million. Another 58,000 are behind with their repayments and are in danger of being considered a credit risk if they slip any further into arrears. 75% of students who default on their loans have dropped out of college and not completed their degree. More than half (53%) of students from families who work in manual jobs or are on benefits chose their university because it was close to home, as the costs associated with third level are too high.

Returning to The Irish case, fees would have a negative impact on student participation. Terri Scott, President of Sligo IT has stated “concern that current lack of information and negative speculation will negatively influence student recruitment and discourage those who have the potential to benefit from a third level education. Any sudden increase in fees would have a serious impact on IT Sligo”.

A recent USI survey showed that one in three students would not be financially able to pay fees. The possibility of summer work has been severely eroded and will leave many students struggling to make enough for the registration fee. Further concern is that the incoming students, who have not been consulted about this process, will effectively be sleepwalking into debt.

At a time of deep recession it is unfair that these students or their parents would not have sufficient time to examine how college fees would affect them or their future earning potential.

If changes were proposed for the senior cycle curriculum at second level, a period of two years notice would be given to ensure that students are accommodated. We ask that government take this into consideration when the proposals come before cabinet. We are also concerned that any decision on fees would undermine the Strategy group, set up by the Minister of Education and Science to investigate the third level sector.

All these systems do not increase participation in third level education but rather curtail it. USI fundamentally believes any return of fees would instigate a chain of events that would prevent potential students from attending college and with the proposed knowledge based economy the option of fees/loans should be dismissed.

Education must be the foundation upon which our future prosperity is built. This will require a focused and strategic plan, one that seeks long term sustainable solutions to solve the funding crisis that we currently face.

A short sighted knee jerk reaction will leave a generation of young people excluded from Higher Education.