The debate about the best way to fund higher level education in Ireland has recently been reignited, with Fine Gael pledging to introduce a student loan scheme for third-level education if the party is returned to government. The scheme has received backing from the Royal Irish Academy (RIA) who claim the introduction of a loan scheme is necessary to curb the decline in funding and quality in third level education in Ireland, with total government funding allocated to universities declining by 36% between 2008 and 2014.
Trinity has consistently slipped down the tables in both the QS World University Rankings and the Times Higher Education rankings in recent years. Last year Trinity placed 78th in the QS rankings, compared to being ranked 43rd in 2009. In response, Trinity has recently announced the establishment of the Rankings Steering Group, to be chaired by Provost Patrick Prendergast. It is apparent that this decline seen by Trinity is reflective of the lack of resources and funding available and thus it is clear that student fees could have an important role to play in solving the issue.
Despite the introduction of “free fees” two decades ago, an annual student registration fee has climbed to €3,000. This fee has risen by €250 a year over the past four years. Fine Gael’s education manifesto states that a scheme would ensure college is free at the point of access and that graduates would begin to pay back tuition fees once their income reaches a certain threshold. The Government would remain the main provider of funding to third-level education. In light of this, we will compare and contrast different models of college funding systems from around the world, dealing with four case studies in particular: The United Kingdom, The U.S.A., Sweden, and Ireland.
In the United Kingdom, tertiary education is mainly privately funded, and individual households, through the tuition fees paid by students, account for the largest share of that funding. An income contingent loan system was introduced in 1999. Fees have risen over the past decade to the point that now university students in the U.K. face bills of around €11,000 a year. At least 70% of students rely on a public loan to help fund their studies.
In the U.S., the system varies from state to state. Universities receive little support from the government meaning the primary source of their income comes from student tuition fees. Students receive little in the way of financial aid from the government and depend on student loans in order to fund their college education. Tuition fees at a public university costs around $15,000 a year. For private universities this number rises to around $30,000 – $40,000 and can be even higher still for some of the elite private universities. The cost of college in the US has nearly sextupled since 1985. This is all exclusive of living expenses, for which there is almost no public support whatsoever.
Tuition is completely free in Sweden with all costs being covered by the Government. Financial aid is also generously available from the CSN, a state sponsored entity which distributes grants and loans to students to help cover living expenses.
Despite the huge financial barriers that exist in the U.S. at the point of entry to college, the amount of young people expected to enter tertiary programmes, as defined by the OECD, before turning 25 stands at 53%. This is significantly greater than the OECD average of 48%. Ireland sits just above the average at 50%. In spite of the fact that Sweden has completely free college tuition fees, their expected attendance rates comes in below the OECD average, at 44%.
A young person in Sweden whose parents received a university education is 2.3 times more likely to go to university themselves, while in the UK they are six times more likely. When the income contingent loan system was introduced in the UK in 1999, people argued that fees would drive down the numbers applying to higher education. In fact numbers have increased, with individuals from some of the most deprived parts of Britain being now two times more likely to attend a university than they were a decade ago.
A big factor in influencing Ireland’s recent debate about the introduction of fees is the lack of funding for primary research currently available for Ireland’s universities. The RIA is taking the stance that the introduction of fees is essential if Ireland wants to maintain a high standard of research output, believing we have slipped in recent years due to budget cuts and rising attendance rates. The RIA believes that an additional funding of €100m per year over the next decade would be required just to sustain current standards. The Global Innovation Index (GII) assigns scores to countries for Research and Development based on factors including number of researchers, gross expenditure on research and development, and the QS university rankings.
“Trinity has consistently slipped down the tables in both the QS World University Rankings and the Times Higher Education rankings in recent years. Last year Trinity placed 78th in the QS rankings, compared to being ranked 43rd in 2009”
The United Kingdom comes out on top in this regard with a score of 77.6, with the U.S. coming in second with 71.1. Perhaps this is not surprising considering the huge endowments of the big private colleges in The States, with many of the top universities having resources of billions of dollars. Ireland trails these two leaders by a substantial margin, scoring 63.2.
However, by far the worst off is Sweden which only comes in at 47.7. This is slightly surprising considering that Sweden spends €18,466 per student on tertiary education, substantially more than the OECD average of €12,381. More than 50% of this expenditure is on Research and Development (R&D). Sweden ranks in the top three for expenditure on R&D out of OECD countries.
The results of the GII could be skewed by the inclusion of QS university rankings in which the U.S. and the U.K. would perform strongly in due to the status of the countries respective elite universities. Sweden is ranked 2nd across the OECD for publications per head and 7th for the number of researchers per head of the population.
The OECD produced a report on income advantage for people attending tertiary education. The scores are compared to a base score standardised at 100 based on the average income of an individual who has received an upper secondary education, but no higher. Ireland tops the board on this comparison, edging the U.S. for first place with an income advantage of 75%. People who have attained a college education in Sweden receive the lowest level of income advantage out of our four case study countries.
Sweden have the second lowest income advantage across all OECD countries, with an income advantage of just 28%. One of the main factors in dissipating the earnings premium from obtaining a college degree in Sweden is probably their progressive taxation system. Sweden supports the second highest tax burdens in the world, with most people (those earning over €40,000) paying between 49 and 60 per cent income tax. The bigger wealth gap in America can similarly be attributed to their tax structure.
However it is important to consider, the massive price tag on college entry in America reinforces a barrier to education for those less well off, widening the income advantage for the educated. 31% of US adults who have completed a university level education earn more than twice the median, compared to the OECD average of 28%. A tertiary-educated individual in the United Kingdom earns more than 55% more than a person with upper secondary education (the OECD average is 59%).
“The amount of students entering tertiary education is expected to increase by about 30% over the next ten years or so. In order to simply meet this demand an additional funding of around €1 billion a year would be needed”
The average non-completion rates for third level students across all OECD countries is seen to be 31%. Both the UK and Ireland fair quite well in this category, coming in significantly below the average at 16.8% and 18% respectively. Sweden sits well above the OECD average at 45%. College dropout rates are notoriously high in the US, with the current figure sitting at 53%, meaning the US has the lowest college completion rate in the developed world. The non-completion problem in the States is inherently linked to the high levels of student debt and high tuition fees.
The U.K. has by far the highest levels of student debt out of our four countries, coming in with an average total debt of €56,700. Despite having free fees, Sweden still comes in with one of the highest levels of debt across OECD countries, with €17,024. This may seem peculiar, but the culture of parents supporting their kids by funding their expenses through college does not exist in Sweden, as it does in Ireland for example. It is common for Swedish students to take out loans and grants from bodies such as the CSN in order to fund their living expenses. It is surprising then that 85% of Swedish students graduate with debt, versus only 50% in the US. New Swedish graduates have the highest
debt-to-income ratios of any group of students in the developed world somewhere in the neighborhood of 80%. According to data collected by the OECD, despite nonexistent tuition costs, Sweden has a virtually 100% uptake rate on student aid. America, despite its very high college tuition fees, still has a significantly lower level of average debt for students than the U.K.
A lot of American parents start a college fund for their kids from the time of their birth and this helps ease the burden of the high costs of college for American students, and results in this lower level of debt. A standard student loan scheme doesn’t currently exist in Ireland and as a result most Irish students come out with little to no debt, it is hard to find exact figures for this. Students less well off are helped through college usually by grants such as the SUSI and it is also common for parents to pay for any other expenses such as rent.
Overall the prospects for British and American graduates is quite grim considering the levels of debt which they leave university with. British and American universities top the tables in the university rankings but it comes at a massive cost to the student. Despite Sweden having free fees for all, students still leave college with some of the highest levels of debt seen across the OECD and also have one of the lowest income advantages for a third level qualification.
Even with Irish universities slipping down the rankings in recent times, the higher education system looks quite good from the offset in the areas we have investigated. We have more people attending college than the OECD average, relatively good quality of research output, little to no student debt upon graduation, and a huge income advantage of around 75% compared to those who do not obtain third level education.
In fact this focus on college rankings has been argued by many recently to be an unhealthy way to approach thinking about college in the first place. Our primary focus should not be on where we rank internationally, particularly due to unrealistic standards of resources as seen by the world leading universities such as Harvard and Oxford, compared to the limited resources we have in Ireland due to the economic environment in which we unfortunately live. Rather, the focus should be on the quality of education and equality of access for Irish citizens.
“Fees have risen over the past decade to the point that now university students in the U.K. face bills of around €11,000 a year. At least 70% of student rely on a public loan to help fund their studies”
A problem exists however in that current standards are unsustainable given that high birth rates mean that the amount of students entering tertiary education is expected to increase by about 30% over the next ten or so years. In order to simply meet this demand an additional funding of around €1 billion a year would be needed. A rethink is required if we want to be able to cope with this demand and also to curb the decline in quality of Irish universities’ research standards.
The high proportion of people attending college seems good at the outset, but maybe we need to change the way we think about universities. The amount of people with college degrees has almost reached a saturation point over the last number of years. If everyone has a degree, does this just make the qualification a worthless but necessary piece of paper to obtain? Are we just pushing the problem back further in the sense that it’s almost reached the point where it seems that one needs a postgraduate qualification in order to distinguish themselves?
Our second-level education system is completely focused on the Leaving Cert, the sole role of which seems to be to determine what you can study in university. But academia is certainly not for everyone, and why should we be spending money on sending people down the university path to which they are not suited, and to study for a degree that will have no benefit for their future career (assuming it is not an academic career path)?
Obviously, there is so much more to attending university than just what’s learned in lectures. The value of moving away from home and meeting new people from completely different backgrounds of course goes a long way in personal development and becoming a more rounded individual. But perhaps we must put new structures in place to facilitate the development and education of those less academically oriented and to ease the burden on our universities.
This system would be more in line with that of Germany where people who come out of second-level education have another option to university, which is to pursue dual training, in which their course incorporates not just lectures but also more practical work experience and apprenticeship style training. The problem in Ireland has been come to be known as the “Cinderella” effect. The university path is considered the best option for Irish school-leavers regardless of their abilities and prospects for the future.
Similar to in Cinderella when the protagonist’s sisters are willing to cut off their toes to fit the princess’s shoe because they are so keen on the prospect of the lifestyle, in Ireland people are forced to fit into a highly academic university system as there is no real alternative.
It is hard to see from looking abroad how the introduction of fees will have any benefit for the student. Total student debt in the US recently exceeded $3 trillion. This level of debt has massive socio-economic knock on effects. For the individual leaving college, it means people are now delaying purchasing things such as homes and cars which can lead to a hindrance on future economic growth.
High levels of student debt can also worsen economic inequality and reduces the potential for education to be a driver of social mobility. The existence of fees means the existence of an entry barrier to third-level education and the existence of debt means that less well off students leave university worse off than they started.
We are currently facing a crossroads in Irish education and it is apparent that we must change the way we think about education. We must turn our focus away from rankings, and towards the quality of education we are providing to our students. We must ease the financial burden on our universities not by the increase of fees, but rather by providing realistic alternatives to university for school leavers who do not want to pursue an academic route.