Graduates who emigrate would be required under law to repay student loans under proposals contained in an expert group report on the future funding of higher education.
The report, submitted recently to the Department of Education, provides fresh details on how an income-contingent loan system for graduates could operate.
Under this system, the €3,000 student contribution fee would be abolished and college would be free at the point of access.
Instead, graduates would begin to repay tuition loans of between €12,000 and €20,000 once their earnings hit a minimum threshold, such as the average industrial wage.
Repayments would vary depending on individuals’ circumstances but could be as low as €25 a week and benefit from low or zero interest rates.
The non-payment of loans as a result of emigration has been a growing concern in other jurisdictions which have introduced student loans schemes, including in New Zealand and Australia.
Main options
However, the expert group report, chaired by former union leader
Peter Cassells
, identifies three main options to ensure debtors pay their fees:
Tax agreements with other countries such as the UK, Australia and the US.
Laws obliging debtors to pay their student debt to the Revenue on the same basis as if they were resident in Ireland.
Requiring all debtors going abroad to pay fixed minimum payments, such as €1,000 a year.
The report leans most heavily on the second option, on the basis that it would maintain the principle that graduates should only pay when they earn above a minimum level.
In addition, it would mean debtors in low-income work overseas – such as those volunteering – would not be required to make repayments.
“Graduate emigration is a concern for a student loan scheme,” the report says. “However, it should not be assumed that emigration implies an end-of-loan obligations; this is not the case with loans generally.”
State-funded system
An income-contingent loan scheme – which would still involve the State paying up to 60 per cent of the cost of higher education – is one of three funding options in the report.
A second option is a mostly State-funded system under which the €3,000 contribution fee would be abolished and higher education would be free for first-time students.
This would require the State contributing 80 per cent of the cost of higher education.
The report notes that while this option would be straightforward if State funding was available, it could be seen as unfair to citizens who do not receive a higher education.
A third option is increasing State funding and retaining the current €3,000 student contribution fee.
All three involve increased State funding and an improved system of grants and support.
The report also says it is clear there is a need for urgent reform of the funding landscape for third level.
