The Union of Students in Ireland (USI) has said a proposal that would see the introduction of a new income-contingent loan system for graduates would not work in Ireland.

USI president Kevin Donoghue criticised the contents of a confidential 70-page draft report, reported upon today in The Irish Times, which proposes that graduates would begin to pay back tuition fees once their income reaches a minimum level.

Mr Donoghue said the report does not address the wider financial costs faced by students and would place affluent students at a distinct advantage over their less-well off peers.

The proposal could also lead to students selecting courses based upon the projected economic value of the course rather than the wider benefit the course might otherwise offer.

“If you are able to pay the fees or if your family is in that position where they can cover the cost without having to take out a loan that would put you at a significant advantage later in life,” Mr Donoghue said.

“It will force people to focus on the economic output of their course as opposed to the benefit it would generally bring.”

“I would have huge concerns about that.”

The USI president said the student registration fee has increased by "about 200 per cent" in recent years and that it has been “consistently increased as a means to find additional funding”.

The introduction of an income-contingent loan system would place an additional burden on students who already avail of the grant, which he said was already "punitively low".

“For people who would normally qualify for the grant, this proposal would represent a €4,000 a year increase on the registration fee,” he added.

“The idea that this is going to provide something of a benefit to students is unfair as well in that it is designed specifically to increase the levels of funding and even if you do have your tuition covered the cost of college every year – excluding tuition – is €8,000 on average."

Mr Donoghue said the report was not "about addressing those problems."

"So (the report) is definitely not put together with the best interests of students in mind," he said.

Mr Donoghue said a “frustrating aspect” of the debate about third-level funding “is that we continue to pretend that we are all on the same playing field when it comes to contributions”.

Calling for increased contributions from employers who he said currently pay below the EU average, Mr Donoghue said "we’re pretending that employers are making the same level of contribution and we are pretending that the State is (also) doing that when in actual fact they are not."

While the State’s investment in higher education is “below the OECD average,” Mr Donoghue said the contribution made by business or industry “isn’t really anything worth speaking of.”

The USI president said the Government could generate an additional €8 billion per annum if  employers’ PRSI was gathered at the EU average - "the education system needs just €1bn".

Mr Donoghue said the focus was on “increasing the second-highest fee in Europe while simultaneously suggesting that it is unreasonable to expect other groups to make EU average levels of contribution".

Sinn Féin education spokesperson Jonathan O’Brien said his party's position is that education should be free and that the current grant system should be enhanced and reformed.

“Over the past number of the years, the grant system has been chipped away at with the Government changing the rules to exclude greater numbers of people or give them less supports, for example, by changing the adjacent and non-adjacent rate.

“We do not want to see a situation whereby the government introduce a loan system that effectively eradicates the grant scheme by stealth, so we have major concerns about these proposals.

Kieran Allen, a UCD academic and People Before Profit member said the experience elsewhere indicated the introduction of a loan-scheme "would be disaster" as it would "cripple young people with debt for decades after they graduate".

Mr Allen also said it would "pave the way for a systematic run-down of State funding and an increase in student fees."

"The experience of student loans in America has been a disaster. Total outstanding student loan debt in the US has become larger than total outstanding credit card.

"Between 1990 and 2010, real funding per public full-time enrolled student declined by over 26 per cent.

"Over the same period, tuition and fees at four-year public colleges and universities rose by 112.5 per cent while the price of public two-year colleges increased by 71 per cent."

"Today, the average US student graduates college or university with over $25,000 in educational loan debt.

"We do not want a repeat of this experience in Ireland. The political establishment will dangle the prospect of cheap loans in front of financially stressed students. But in the longer term it is a poisoned chalice."