Fees

The “free fees initiative” of 1996 is a major element in the funding of undergraduate degrees. For those within the scheme, the Irish state pays for tuition, leaving the student to find the registration fee and maintenance costs (with or without help from a means-tested local authority grant). A Labour party initiative, it was at the time presented as a redistributive measure, though (as both rich and poor could take advantage of it) this was always a matter of opinion.

Abolition of “free fees” is now being mooted – though temporarily parked after it caused tensions in the Fianna Fáil / Green coalition – and has attracted some of the hysteria that surrounds most issues of public and private finance in these difficult times. The problem is however not a simple one. There seem to be at least four aspects or dimensions to it:

• Equality of opportunity – Would fees confine university education to the better-off?
• Tax equity – Given that someone must pay for universities, would fees put an unfair proportion of the cost onto the less-well-off?
• University policy – Would fees make universities better off, and if so what would they do with their new money?
• Symbolism – Is Ireland a society where education is a right, or rather a privilege for those with money?

These issues are all obviously linked with one another. But:-

• Other factors impinge on each of these issues. Fees are not the only factor affecting access to education and tax equity; payment for undergraduate courses is only one element in university funding; what is a “right” and what is a “privilege” are fundamental political questions covering many matters.
• The effect of reintroducing fees is extremely obscure, much depending on details. It is not obvious that fees would reduce equality of opportunity if they were means-tested. There are various alternatives to fees, and different views on how equitably each spreads the burden. And it cannot be simply assumed that fees would benefit the universities themselves – the government might simply reduce core funding to universities by the amount of the fee income, so that fees would benefit the exchequer.

A closer look at each of the issues:-

Equality of opportunity. Common sense tells us that making students pay fees discourages them from further study, and that it disproportionately discourages those with less money. However, common sense alone cannot tell us how great this effect is, whether it can be mitigated by means-tested fees, or whether the public money spent on “free fees” could be better employed in other ways to enhance equality of opportunity. There is some evidence of improved working-class participation in third-level institutions since “free fees”, but this is part of a pattern of increased student numbers and worsening staff:student ratios generally; it is not clear that this represents a genuine advance in access or eventual employment prospects, let alone that “free fees” is the cause.

Of course, talk of “free” education is an extremely misleading shorthand in this context. Tuition fees are paid by the state, but the registration fee is for the student, and the government have found that they can increase that fee substantially at little political cost (see “Student registration will increase to €1,500 from next September”, Irish Times, 15 October 2008). Maintenance and study costs must depend on the means-tested local authority grant, or personal resources (family and/or a job while studying). Inequality at home translates into inequality at university: inability to pay for private secondary education may lead to worse grades and so to a reduced chance of reaching university; state subsidy for education costs may not matter if other benefits on which students rely are cut (see “Cuts could wreck poorer children’s college chances”, Independent, 15 October 2008). And getting a higher proportion of working class students into higher education is no great achievement if they then drop out in disproportionately large numbers (see “Counting the cost of third-level education”, Independent, 8 October 2008). (On Irish students’ financial  position and conditions of life generally see Eurostudent Survey III (February 2009)).

There is certainly a school of thought that “free fees” are incompatible with a fair education system, and should be abolished forthwith. “Free fees” have not demonstrably improved access, so there is no reason to suppose that their abolition would harm it. The money is simply not targeted at those who need help: part-time students are not eligible, and much of the money goes to benefit middle-class students whose parents could probably find the money themselves. Indeed, there is some evidence that “free fees” have encouraged middle-class families to spend more on private schooling, hence buying better grades for their children and making matters worse for those educated publicly. On this view, “free fees” are mostly a subsidy for the middle-classes, artfully disguised as a scheme to promote social mobility; the money would be far better spent by using it to improve state education at secondary level (see “Fees do not harm access, says architect of policy”, THE, 22 January 2009). Assuming that the full fee is charged only to those able to pay it, re-introduction seems an obvious choice (see “Fees should be a no-brainer for socialists”, Irish Times, 15 August 2008; “College fees must be used to combat social inequality”, Irish Times, 25 March 2009).

The counter-view is that while “free fees” are no panacea, nonetheless they were a genuine advance for working-class interests, and a stiff fight to hold on to them is in order (see “Bringing back college fees ‘would sabotage progress’”, Independent, 3 October 2008). If the beneficial effect of providing genuinely free tertiary education is unproven, that is because it has never been tried; what gains have been made should not lightly be surrendered. Clearly, however, the fees issue is only one aspect of a multi-faceted problem (see Martin J. Power, “Why Not Education?” (2006); Garret Fitzgerald, “University fees would be unjust without other radical reforms”, Irish Times, 23 August 2008; Ferdinand von Prondzyski, “Fairness crucial if third-level fees are brought back”, Irish Times, 24 February 2009).

Tax equity. At the time of their introduction, “free fees” were presented as straightforwardly redistributive: free tuition was to be available to all who could secure a university place, regardless of family circumstances; the new arrangement was paid for by placing restrictions on covenanting, a tax avoidance device much used by middle- and higher- income families. While the precise redistributive effects are hard to assess even in retrospect (“Tax-reform savings ‘could pay college bill’”, Tribune, 19 October 2008), nonetheless there is a broad perception that exactly the opposite may have occurred: that “free fees”, paid for out of general taxation to which all contribute, effectively redistribute resources to the higher social classes, because of their greater participation in higher education.

Ironically, therefore, the abolition of “free fees” is in its turn being presented as straightforwardly redistributive (see “O’Keeffe: why should the rich go free?”, Irish Times, 16 September 2008). Whether this is really plausible depends on various matters of detail: will there be means-tested reductions at the lower income end, and if so how large? will those who pay the fees be able to claim a tax allowance for so doing? etc etc. Even a guesstimate of whether any proposed reform will really redistribute income would be a substantial number-crunching exercise.

For those looking for alternatives, several are in play the moment (for more discussion see “How are we going to pay for a Learning Society?”, progressive-economy@TASC, 24 October 2009):

• Retain “free fees” but also introduce a graduate tax. Presumably the tax would kick in a certain number of years after graduation and/or when the graduate reaches a certain level of income. This appears to be current Fine Gael policy (see “Hayes proposes graduate tax to fund third-level education”, Irish Times, 22 November 2008).
• Introduce fees but also a student loan scheme, so that payment is delayed until the graduate is earning. This seems to be the preference of university heads (see “University heads want fees paid by student loans”, Irish Times, 23 September 2008). However, the experience of Australia and the UK with similar systems suggests that it would be a bureaucratic nightmare (see “O’Keeffe to discuss student loan plan with universities”, Irish Times, 24 September 2008).
• Retain “free fees” and pay for improvements to the universities by either increased general taxation or increased corporation tax. However, the massive unpopularity of tax increases makes this unlikely; if it were possible to raise these taxes, tertiary education would be low on the list of likely beneficiaries.

University policy. There is no doubting the desperate financial position of Irish universities. They have grown remarkably over the last decade. But their funding has not kept pace. And now the recession threatens to make matters a good deal worse (see “Cuts ‘will trigger brain drain of top academics’”, Independent, 25 September 2008); so much so that at least one university president has spoken openly of closure or amalgamation of universities (“We have too many colleges, says UCC chief”, Independent, 3 December 2008). What are they to do? As hot-houses for much of Ireland’s new young talent, the universities have some potential leverage to extract further sums from central government. They can also point to the opinion of the OECD, which has recently reminded Ireland of its relatively low investment in higher education, and reiterated a 2003 recommendation to re-introduce fees along with improved student support and a government guarantee that the net balance of resources would go to the universities (“Tuition fees ‘would reduce university cost pressures’”, Independent, 10 September 2008).

However, the government has made no public promise that the universities will keep extra resources generated by the introduction of fees, and in current economic circumstances there are abundant reasons to assume that government will do no such thing. That being so, the question might be asked why university chiefs have been so openly compliant with the plan, using their own opportunities for publicity to support it or suggest only minor variations. Of course, politics is the art of the possible, and so it needs no explanation that public university policy is not too much at variance either with the government’s or that of the main opposition party. Nonetheless, there are some solid reasons why the university presidents might not be too unhappy with the re-introduction of fees, even though there might be no immediate financial gain:

• It is not unreasonable for the presidents to hope that, in the medium-to-long term, they would do quite well out of fees. No doubt the government will initially impose sharp limits on how much domestic students may be charged, but when Ireland eventually emerges from recession strong arguments can be brought to bear for relaxation of these limits. No doubt a close eye is kept on negotiations between UK universities and government over their “cap” on fees, and a view formed over whether Irish universities want to be in a similar position.
• By conceding that change may be desirable, and semi-publicly debating with the government over what form it should take, the university presidents are seen as responsible officials who are trying to tackle important problems. By contrast, any defence of the status quo, or insistence that the main problem is that the government isn’t giving them enough money, is likely to be ridiculed, inside and outside of government. This is of course a depressing conclusion for the universities, and it would not be the first time that some ghastly “reform” is foisted on them because, to outsiders, it at least appears to constitute “doing something”.
• Finally, even if the re-introduction of fees did not earn the universities a cent, it would nonetheless mean that a major proportion of their income would have been acquired by their own efforts, rather than given by the state – legally and politically, it would be their money, not public money. This could be expected to increase the universities’ level of control over their own destinies, and to change the tone of university controls, which would be less like management of a branch of the public service, and more like light-touch consumer protection. “Universities are now more heavily dependent on money dished out through a bureaucratic, centralising quango … Free fees have also cut the financial link between the colleges and their customers, and the effect has been to convert them into non-commercial semi-state bodies.” Having come dangerously close to the state, the universities’ impulse seems to be to reconnect with the market – at least sufficiently to keep the state at bay.

University presidents are playing a long game. Times will be very lean until Ireland emerges from the current financial crisis. No doubt they wish universities then to emerge as valuable contributors to the economy and to society generally, and eminently worthy of further reward – rather than as financial invalids for which the political parties loudly proclaim their various remedies.

Symbolism. While few of the more symbolic aspects of the problem stand up to rational scrutiny, nonetheless they have power despite this, and often serve as shorthand for more serious arguments. None of the protesters calling for “No Fees” really believes (I hope) that universities can or should teach for no payment; none of those who insist that students today have it much too easy really believes (I hope) that being too poor to afford university education confers any sort of moral superiority. But both sentiments sum up important positions on where it is reasonable to look for the funding of higher education.

The art of the possible. Until very recently indeed, no sane Irish politician would have dared to re-open the issue of how higher education is paid for. Suddenly however a mixture of factors – increasing university deficits, vague but troubling government concerns over university management, and of course the state of the economy – have brought formerly unthinkable reforms into the realm of the possible (see: “‘Nuclear’ fees bomb defused by fearful FF”, Tribune, 17 August 2008; “Sutherland urges ‘Tallaght strategy’ for college fees issue”, Irish Times, 18 October 2008). These are interesting times.

Further reading: Click on the fees tag for recent news and views on these issues. See also:

DIT: fees will not create money for third level (Sunday Business Post, 9 August 2010)

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