Employers would contribute to third-level costs under proposals

Employers could be required to contribute an additional €100 million annually to higher education costs, if proposals in a draft report on third-level funding are implemented.

The expert group report, to be finalised in January, has examined the option of increasing a levy on employers, given that businesses benefit significantly from skilled graduates.

The National Training Fund was established in 2000 as a way of supporting those who wish to take up employment or training. It is mainly financed by a levy on employers of 0.7 per cent of earnings in respect of insured employees.

The levy raised €340 million last year, but the expert group report recommends that the levy be increased to allow for greater support of programmes in higher education.

“This revenue stream should be used to support programmes in areas of skills demand across the economy and public services, and to support flexibly delivered programmes – including part-time, distance and online – in public and private higher education institutions,” the draft report states.

Options

The expert group, chaired by former union leader

Peter Cassells

, is due to present a range of options to Minister for Education Jan O’Sullivan next month.

Yesterday, she declined to comment on the draft proposals on the basis that she had not received the report. However, she said it was time to debate all the funding options available.

Ms O’Sullivan said she planned to publish the report as soon as she received it, assuming a general election had not been called by then.

The draft report explores three main options: a free model of higher education, similar to systems in Denmark, Scotland and Norway; maintaining the current system, with its €3,000 student contribution fee; and a hybrid model of income-contingent loans for students, along with contributions from the State and employers.

Scandinavian model

Under a free Scandinavian model, the report notes that these countries have some of the highest levels of investment per student in the world.

If adapted to Ireland, it would require additional State investment of about €1.5 billion a year by 2030.

The draft report states that this would require significant changes to the level and share of total tax revenue.

“The expert group believes that, as such, this funding strategy is unlikely to be implementable in an Irish context,” it states.

Under the second option – keeping the current system in place – the report says the State would have to pay an additional €1.1 billion by 2030. This would be due mainly to projected increases in student numbers.

The report leans heavily on the third option of student loans, together with higher contributions from the State and employers. It says this would raise more than €1 billion and cost the State much less than the other options, while still raising enough money to invest in higher education.

Under this system, the report explores the option of a €4,000 annual fee, which, the report estimates, could be repaid at about €25 a week over 15 years or so.