Paying the price for free education

Today, I’m writing as an academic and as the Acting Chair of the Higher Education Authority, because I think it’s really important to respond to the recent publication of the Cassells Report on the funding of higher education.

You might not know much about the HEA. It has three main jobs. It disburses about €1 billion in funding to the higher education institutions of this State, it regulates the higher education sector, and it provides policy advice to the Minister for Education and Skills.

The government, the HEA, and all the higher education institutions work within a national strategy around higher education, which takes us out to 2030.

The strategy we as a society have adopted for higher education until 2030 is to push for further and higher education for everyone who wants to go, regardless of their ability to pay at the moment they are admitted. Education should be freely available to those that want to avail of it.

But education is not free. Education has never been free to provide. As I said, the HEA spends over €1 billion of your money on it, and this is nowhere near enough to provide the kind of system envisaged in the strategy to 2030.

Since 2008, the need for the state to reduce its spending has hit higher education institutions very hard. The state payment to universities has fallen to about 64 per cent of the total, while direct contributions by households have increased dramatically.

Of those who are going to college, about 50 per cent pay the €3,000 contribution. Obviously, about 50 per cent don’t, meaning the middle classes, who pay for much in Irish society, are subsidizing those on lower incomes. It also means there are inequities around the income thresholds used to distinguish between someone getting a fee waiver, and someone not.

Over the past six years, as the funds from the state have shrunk, and the numbers of students have climbed, higher education institutions have coped by hiring fewer new staff, giving more work to existing staff while cutting their pay, searching for non-state funding, and digging into their reserves, which was exactly what every other business in the country was doing: more with less. Like anything else, the higher education sector can only do more with less for a short space of time. Eventually, it’s just less.

Higher education is a deeply rooted ambition for much of our society. In 1980, 20 per cent of those aged 18-20 went to third level. Today it is nearly 60 per cent. In 1980, around 15,000 people were going through colleges. In 2015, that’s closer to 44,000. This is expected to rise as the number of school leavers increases in the next 15 years.

The Cassells report is clear. On page 10 of the report we read: “The current arrangements are simply not fit for purpose. Significant investment and reform is required. The challenge cannot be addressed by minor tweaks or easy fixes.”

Like any business under pressure, during the crisis higher education institutions managed their finances as best they could, and delivered on the outcomes the state and the HEA set them. Student and employer surveys and the HEA’s system performance framework show us that, despite all of the cuts, the system as a whole did its job well.

Here’s just one measure to give you a sense of how well the system performed. In 2012, the latest year we have comparable data for, Ireland had the second highest level of maths, science and computing graduates per 1,000 of the population aged 20-29 in the EU, and this was nearly double that of the US. Ireland had the highest percentage of students studying science, maths and computing in the EU at 16.4 per cent, compared to the EU-28 average of 10.4 per cent.

But now we have institutes of technology which have no reserves and which are financially vulnerable, which haven’t upgraded their computers or laboratory equipment for seven or eight years, with rotting buildings and staff looking forward to an increasing workload due to increasing demographic pressures,

Nor am I just talking about small colleges and institutes of technology. I’m talking about universities too. Several of our flagship educational institutions are running large deficits, and they are really struggling to make ends meet.

It is now only a matter of time before a funding crisis causes one of three things to happen. Either the higher education institutions stop admitting more students; or they simply run up ever-greater deficits back-filled by the taxpayer while starving services for students and reducing the quality of the educational experiences for these students; or some of them shut down.

In the long term, you can’t have demand rising constantly with a degradation of the ability to supply quality outcomes and expect everything to remain as is. The result is a poorly-resourced, poorly-performing system which doesn’t meet the needs of society.

The Cassells report makes the case for three options. One: increase state funding and abolish the student contribution. Two: increase state funding, keep the student contribution. Three: increase state funding, delay the student contribution by building in a loan structure, which you pay back later when you can afford to.

Option 2 increases state funding by less than Option 1, and Option 3 increases state funding but by less than the other two.

Many groups have jumped to discredit option 3, the income contingent loans option. This option makes education free at the point of entry and enables burden sharing by taking on the default risk of those that do not repay fully. The income repayment threshold reflects the fact that only those benefitting from third level education should be responsible for some of the cost. The devil is in the detail of this proposal, and those details have not yet been worked out.

Option 3 may or may not be the best option, but it’s not the worst, either. The worst option is doing nothing, or next to nothing. The higher education sector has shown it can deliver efficiency gains under challenging circumstances. But that can’t last forever, nor is that delivery free of charge.

So who should pay, and how should they do it?

It cost just over €1.8 billion to fund the system from all sources in 2015. To meet the future demand for higher education we know will be there, either students and/or their families, or the state, or employers have to pay. All we’re really talking about is the proportion of the contribution amongst the groups.

The standard response from those reacting negatively to the Cassells report has been: pay for the necessary increase in third-level funding by taking it from general taxation while reducing the €3,000 fee.

This is a cop-out, and also very cynical, as many of those arguing the point know higher education will join the queue of government priorities. Cassells argues against “minor tweaks and easy fixes”, and this is what those who oppose thinking about Cassells’ recommendations are advocating.

The ‘general taxation’ argument is also one option mooted by the report. Guess what? It’ll cost you, the taxpayer, a fortune. It’s also inequitable and regressive. Those who don’t go to third level subsidise those who do, and those who do are overwhelmingly from the middle and upper classes, as HEA research shows.

Cassells estimates the additional cost to the state of supporting higher education will be around €600 million per year to meet the current demographic and quality challenges, rising to €1.3 billion per year by 2030 under the ‘general taxation’ structure.

To give you a sense of scale, the entire quantum of increase for every kind of spending in Budget 2017 will be around €1 billion. The chances of higher education receiving a €600 million increase are, to put it mildly, vanishingly slim when housing, homelessness, and water are the key problems to be solved.

I believe deeply that higher education is the means to a better society.

Underfunding the system, or ignoring its problems as the system stagnates is, frankly, a dereliction of our duty. The education committee of the Dáil, now tasked with delivering on Cassells, needs to engage with the substance of the report and bring it forward, and the HEA will assist and advise as necessary.