Here.pdf

Dr. Shaen Corbet and Dr. Charles Larkin presented a statement to the Joint Oireachtas Committee on Education, expressing their view that introducing an Income Contingent Loan (ICL) system in Ireland would be a risky course of action. They argue that it could create large contingent liabilities for the Exchequer, modify social planning objectives, and fail to address the resource per student issue without abandoning fiscal prudence. Their research suggests that 61.5% of loans would be estimated to be junk status, with 21.2% in the lower spectrum of junk status. They propose that for an ICL system to be effective, it would require default rates below 15%, a minimum payment cap of €2,250 per year, and an interest rate of 7-8% over the baseline sovereign. However, they note that this would still result in significant net losses and potentially place a great burden on the Exchequer. They conclude that higher education has to be paid for, and there are only three options: the student, firms, or the Exchequer, and that the current system is unsustainable. They suggest alternative solutions, such as increasing publicly funded higher education through directed exchequer funding, or introducing a model with a higher proportion of non-EU fee-paying students.