The terms of a new student loan scheme offered by Bank of Ireland have been described as “onerous” and “punitive” by USI, the Union of Students in Ireland.
It said the scheme, which is offered as a replacement for the postgraduate maintenance grant scrapped in Budget 2012, was ill-considered and would lead to a “ballooning of student debt”.
The loans, introduced earlier this month by the bank in conjunction with the Department of Education and the National Treasury Management Agency, cover the costs of course fees and are paid directly to the third-level institution. Cost-of- living maintenance loans of up to €2,000 are also available and are paid directly to the student.
The loans can be repaid on an interest-only basis at a rate of 10.8 per cent APR over the first 15 months, to cover 12 months of study and an additional three months. Capital and interest payments are then made for 36 months.
The terms could see students repaying €1,500 in interest on a €5,000 loan, according to union deputy president Kate Acheson.
“The scheme offers terms that are ill-considered, punitive and thoroughly unfavourable when compared to schemes offered in other countries such as the UK and Australia,” she said.
The union said such loan schemes in the UK had a 0 per cent interest rate.
The scheme has been welcomed by Minister for Education Ruairí Quinn. “I hope [it] will mean that students who were concerned about meeting the costs of postgraduate studies will now be able to access these loans,” he said.
