Reform of the higher-education grants scheme is essential. Otherwise, the third-level sector will remain largely the preserve of the better-off, writesSean Flynn, Education Editor"Some people with clearly expensive lifestyles obtain grants whileothers, who are very hard-pressed, lose out"

For the past month,a senior official in the Department of Education, assistant secretary Paddy McDonagh, has been combing through a virtual avalanche of material about access to third-level. McDonagh, a highly regarded official, is preparing a report for education minister Noel Dempsey on how our colleges can be opened up to students from the lower socio-economic groups.

McDonagh is set to present a series of possible options to the Minister next month. Dempsey will then decide whether he will recommend the return of third-level fees when he briefs the Cabinet on the issue. But it is already clear that the current exercise will result in radical reform of the higher-education grants scheme. The system, which favours farmers and the self-employed at the expense of students from lower socio-economic groups, has been condemned by every task force and committee that has considered the issue of third-level access in the past decades.

And what has been the response? The current system - with its blatant disregard for equity - has remained in place and unreformed. Way back in 1993, a Government report on third-level student support, produced by a group chaired by Dr Donal de Buitleir, said reform was "long overdue".

This is an opinion supported by every leading educational figure who has examined the system. Here is what Dr Don Thornhill, chairman of the Higher Education Authority and former secretary-general of the Department of Education, said when launching a report on third-level access two years ago: "A major issue is that while the State is aiming to increase the number of entrants to higher education from disadvantaged groups, many people from these backgrounds do not receive financial aid from the State, while many from more advantaged social backgrounds do receive such aid".

How can this happen? The de Buitleir report went to the heart of the matter. "The means test is defective in that it fails to take full account of ability to pay - particularly since it ignores the accumulated wealth of individuals. Some people with clearly expensive lifestyles obtain grants while others, who are very hard-pressed, lose out."

Under the existing system, a student qualifies for a grant if the family income is less than €21,629.

One member of the de Buitleir committee told The Irish Times last week that he was shocked by the manner in which the system could be abused by some farmers and some self-employed people.

"We had one case of a wealthy vet who managed to bring in his income under the means limit for one year. Once his son qualified, the grant kept flowing; he was never re-assessed."

The current system allows farmers and the self-employed to manipulate their income. They can, for example, invest in new machinery or new offices for the year their son or daughter is heading into college. This can help them to secure the grant.

The de Buitleir report gives other graphic examples including:

One applicant's father had net assets of £500,000, but his "reckonable income" for grants purposes was just £6,228.

One farmer had 122 acres and net assets of £215,000, but his annual income for grant purposes was only £15,000.

The de Buitleir report - which was left unpublished for 15 months - did not pull any punches. The PAYE sector was treated harshly as a disproportionate number of grants flowed to the self-employed and farmers, it said.

Nothing has changed in the decade since the report was published. According to a recent Dáil answer, farmers received more than 1,000 of the 6,000 grants given by 26 local authorities last year. Nearly 400 self-employed people received grants, but only 137 from homes headed by unskilled manual workers secured grants.

The challenge facing Minister Dempsey is to devise a new grants system which will more accurately assess the income of prosperous farmers and the wealthy self-employed.

A sensible first step would be to take control of the grants scheme away from local authorities and hand it to the Department of Social, Community and Family Affairs. Unlike the local authorities, the Department has great expertise in assessing real income. It successfully operates a system for pensions and other entitlements that examines the total wealth of an individual - and not just their declared income. To his credit, Dempsey appears ready to transfer control of the grant scheme to Social, Community and Family Affairs.

If he is serious about reform, the Minister must embrace the core recommendation of de Buitleir. This was that the means-test for third-level grants must comprise both an income and a capital test. In essence, the new system would look at the full picture - the assets, the accumulated wealth, the properties - instead of just relying on the income figure provided.

This option is fraught with political risk. Dempsey can expect ferocious criticism from farmers and groups representing the self-employed. But he has no other choice. If fees or additional charges are on the way, reform of the grants system is even more essential. Otherwise, third-level will remain the preserve of the better-off.