Tomorrow, university presidents will meet Minister for Education Batt O'Keeffe amid increasing speculation about the return of fees. So, what does the future hold for students and their parents, asks Seán Flynn

Q. Are third-level fees coming back?

Nothing has been decided but the momentum towards some form of student charge is certainly building.

Batt O'Keeffe re-opened the issue last month. Originally, he said he just wanted to start a debate, but since then he has been a great deal more forceful. He has pointed to the 33,000 millionaires in the State and questioned why they should not pay fees?

Q. Maybe Batt is just flying a kite. What is Brian Cowen saying about all of this ?

Batt is known to be very close to the Taoiseach. It seems unlikely Batt would personally back the return of fees - without sounding out Brian Cowen in advance.

The return of fees would be hugely unpopular, especially with the middle classes. Five years ago, Noel Dempsey tried and failed to bring back fees - in the face of sustained criticism from the PDs and Fianna Fáil backbenchers. This time round, there is probably less risk of internal dissent in Fianna Fáil - and the PDs appear to have been consigned to history.

It would not be easy to re-impose fees - all Opposition parties rail against the idea. But the grim economic backdrop means there is a window of opportunity. There is risk but there is also the reward of boosting university funding - and the possibility of more help for poorer students.

Q. How serious is this supposed funding crisis in our colleges?

Very serious. Most of the colleges are now muddling through with an operational deficit, totalling more than €20 million last year, and some €18 million in 2008. Universities point to a 32 per cent drop in State funding from 1995 to 2005. They are managing on about half the budget available to colleges in the likes of Britain and Denmark.

Yes, there has been millions for research funding, but the infrastructure in many colleges is creaking under the strain of core underfunding. A cursory glance around the Arts Block in UCD, for example, shows it virtually unchanged in 30 years. There are glossy new buildings across the university sector but many of these (especially in UL and DCU) were built by funds from the Irish American billionaire Chuck Feeney. He is now directing his philanthropy elsewhere.

Q. These are hard times. Why can't the universities just accept this and move on?

Here we come to the crux of the issue. Like all vested interested groups, the universities like to beat their own drum. But there is an important difference.

In this case, it is the Government itself which has set lofty ambitions for the colleges. It has identified the third-level sector as the engine which will drive the new Knowledge Economy. The plan is that our world class colleges and their flow of highly skilled graduates will give us a competitive edge in a new era.

In making the case for more funds, the universities are essentially telling the Government that these ambitions are unrealistic. A university system with some of the highest staff/student ratios and a creaking infrastructure is not well placed to be a world leader.

Q. How much would fees generate?

A key question, and one with no easy answer. With more than 100,000 students in third level and average fees of at least €5,000, there should be a pot of gold at the end of therainbow.

But things are not that simple. First of all, you cannot expect poorer students to pay fees. They need more support, not more charges.

You might also have to subtract a fair number of students from households led by the self-employed or farmers. The 1993 DeBuitleir report said these groups can easily sidestep fees by declaring lower income levels for the years in which they are due. That old story about the bar manager paying fees while the publican avoids them has more than a kernel of truth. Batt O'Keeffe has a tax expert examining all of this, but the problem of making these groups liable is not easy to resolve.

Last week a projection by a UCC economist reckoned fees for those earning €120,000 or more would generate about €132 million per year. But his estimate - which was requested by Batt O'Keeffe - was ridiculed by the Labour Party. When tax credits and administration costs are factored-in, they reckon the net take will be only about €15 million. The real figure is probably somewhere in between these estimates; everything depends on how many can be made liable.

Q. So what options will be under discussions when the Minister meets the university presidents on Thursday?

The return of fees remains very much on the agenda. University president would like to see fees combined with a new system of student loans, largely based on the admired Australian model.

The plan is that graduates would repay the cost of college through an attachment on their earnings once they are in employment.

This would deliver long-term funding for the the colleges and, since it would be based on ability to pay, it would be more equitable.

Batt O'Keeffe appears open-minded on the loans model. But, there are many questions to address.

Firstly, how would the loan fund be capitalised for its start-up.

- What body will provide the loan?

- How will the loan be collected?

- What is the rate of interest charged?

- What is the repayment period?

- What are the penalties for those who default?

All of this and other issues will have to be teased out on Thursday.

Q. What is likely to happen?

We are still in the early stages of the debate. All sides agree that the third-level sector needs greater support, but the fees issue is complex. The Minister will need to give his Cabinet colleagues accurate and detailed information on the likely revenue from fees. And a great deal of work has to be done before any proposal on a student loans scheme is ready.

But the Minister appears determined to bring solid proposals to Cabinet, possibly early next year. At that stage, everything will depend on the support he can muster from Mr Cowen and his Cabinet colleagues.