Funding the Future: An annual options paper on reducing the cost of higher education

In May 2022, the Department of Further and Higher Education, Research, Innovation and Science published its policy on the future of third level education in Ireland.

The Funding the Future policy confirmed the Government’s intention to increase the funding given to third level institutions and to reduce the cost of education.

The policy committed to, beginning in 2022, an annual options assessment for measures including student contribution changes and SUSI grant scheme changes be developed, with a view to informing the annual budgetary process.

The options assessment is intended to identify costs and potential impacts, by the department and is published without prejudice to eventual Government decisions.

The following paper outlines various options to examine ahead of Budget 2023. This paper is simply a list of options and issues to be considered in the budgetary process.

Estimate costings are provided for each individual option, however, it should be noted that should two or more options be actioned, this may lead to an increase in demand and accordingly costs.

While this paper focuses on higher education, the department continues to consider reducing the cost of education for students in further education and for those in apprenticeship.

In addition, over time, the annual options assessment is intended to consider progress on other strategic priorities, particularly the extension of supports to enable more flexible forms of learning including blended/online and part-time, and simplification of the student grant system to make it more learner-friendly.

Breakdown of options

The paper is broken down into three sections:

Section 1: Student grant scheme options

This relates to the Student Grant Scheme and the costs and impacts associated with making changes to the scheme to address the cost of going to college for students and their families. This section considers recommendations from the independent review of the Student Grant Scheme.

Section 2: Student contribution and other measures

This relates to options in respect of the Student Contribution and other schemes that the Department of Further and Higher Education, Research, Innovation and Science has budgetary responsibility for. The measures in this section also look to contribute to reducing the costs of going to college.

Section 3: Potential future options

This references other policy interventions that may be considered over the medium term. The costs of these measures will not be known until these potential policy measures are developed further.

Data used to cost measures

The estimated costs associated with measures outlined in this paper have been calculated using the number of students paid a maintenance grant or who have had a fee contribution paid to their higher education institution on their behalf for the 2021/22 Academic year up to the 29th July 2022 & have been adjusted to reflect potential change of numbers in the 22/23 scheme when the eligibility distance for the higher non-adjacent grant reduces from 45km to 30km. (Appendix 1)

These student numbers may increase once SUSI has completed their full 2021/22 reconciliation, however, the numbers below are the most up to date numbers available for the purpose of this exercise.

Legislation underpinning Student Grant Scheme

The Student Grant Scheme is a statutory-based scheme underpinned by the following legislation:

• Student Support Act 2011
• Student Grant Scheme (which is a Statutory Instrument)
• Student Support Regulations (also a Statutory Instrument)

The eligibility criteria for student grants are reviewed annually by the Department of Further and Higher Education, Research, Innovation and Science. All proposals made in relation to tertiary education expenditure, including student grants, are considered and prioritised each year in the context of the Budget process.

As the national student grant awarding authority, the decision on eligibility for a student grant is a matter, in the first instance, for SUSI to determine within the parameters of the scheme. However, a comprehensive appeals process is in place for any students who are of the view that the scheme has not been interpreted correctly in his/her case. An appeal may be submitted firstly to an Appeals Officer within SUSI, and then subsequently to the independent Student Grants Appeals Board.

Programme for Government commitment

The Programme for Government contains the following three commitments regarding the Student Grant Scheme:

• conduct a review of the Student Grant Scheme in 2020, following the impact of COVID-19
• address the gap in grant assistance for postgraduate students
• review SUSI eligibility criteria and adjacency rates

In relation to the first commitment, a review of the COVID-19 impact on the Student Grant Scheme was completed and approved by the minister in March 2021.

In relation to the second commitment, the Government, in Budget 2021, provided enhanced postgraduate supports from the 2021/22 academic year including the fee contribution grant amount rising from €2,000 to €3,500 and the income threshold for eligibility for these grants increasing from €31,500, now €54,240.

To address the third commitment, the minister announced an independent review of the Student Grant Scheme at the time of Budget 2021.

There was significant public interest in the review, with around 280 submissions and over 9,000 survey responses from students. As well as wide stakeholder engagement and student consultation novel research on SUSI data and deprivation index data was conducted.

The minister brought the report to the Cabinet alongside the future funding model report on 4 May 2022.

The report made the following recommendations:

• increase student maintenance grant rate levels targeting those most in need
• adjustments should be made to adjacency criteria
• adjust income thresholds to account for inflation
• extend supports to more flexible forms of learning including blended, online and part-time learning
• investigate the potential to streamline the approach to providing financial supports in further education and training and higher education
• further extend supports to low-income postgraduate students
• develop and implement a comprehensive data plan for further and higher education in Ireland
• targeted communication aimed at National Access Plan groups

The report outlines that ensuring that Ireland maintains the high rates of attendance at further and higher education is of critical importance to building on the success of the knowledge-based economy and recommends that the Government should therefore over time aim to increase student maintenance grants in line with inflation and prioritise:

Key Group 1

Non-adjacent students whose costs have risen the most and who report the highest levels of financial difficulty, and who are more likely to have been affected by rising rent levels; and

Key Group 2

Those students on lower incomes who research shows are more likely to come from deprived areas (i.e., students on special rate and 100% maintenance grant).

In Budget 2022, the minister commenced implementation of this recommendation.

For the academic year 2022/23, this will mean an:

• increase to all student grant maintenance payments, including the special rate of grant, of €200 per year (which will benefit all students entitled to receive a maintenance grant)
• increase of €1,000 to the standard income threshold rates
• reduction of the distance criterion for students to qualify for the non-adjacent rate of student grant from 45km to 30km

This paper outlines a number of measures the department can take to meet the recommendations of the Student Grant Review and address the cost of education.

Option 1: increase certain non-adjacent maintenance grant rates by 25% from the rates applicable in 2021/22 (non adjacent students identified as a priority in the review of the Student Grant Scheme)

• Full Year Cost: €25.29 million
• 2023 Cost: €11.24 million

Description of measure

The student maintenance grant is a contribution towards the living costs of a student. The student grant scheme provides for different levels of maintenance support, depending on means. Grants are also provided at adjacent and non-adjacent rates. These rates depend on the distance a student resides from their college. If you live further away, you are entitled to a higher level of funding.

This measure proposes to increase the non – adjacent rate of grant across certain Bands as set out in the table below. This would equate to all non- adjacent grants having increased by at least 25% on the 2021/22 maintenance grant rates, taking account of measures brought in in Budget 2022)

These increases are estimated to benefit circa 32,000 students.

Increase in Non-Adjacent maintenance grant rates to equate to at least 25% increase

on 2021/22 rates

• 2023/24 rate would be the maintenance rate if this measure was progressed.

Option 2: increase certain adjacent maintenance grant rates by 25% from the rates applicable in 2021/22 (students on lower income identified as a priority in the review of the Student Grant Scheme)

• Full Year Cost: €4.53 million
• 2023 Cost: €2 million

Description of measure

This measure would increase the adjacent rate of grant across certain Bands as set out in the table below.

This would equate to all adjacent grants having increased by at least 25% on the 2021/22 maintenance grant rates, and this measure would benefit circa 20,000 students who currently receive an adjacent rate of maintenance grant.

The above options 1 and 2 estimate the costs of increasing the maintenance grant rates by 25% from the rates that were applicable for the 2021/22 Academic Year.

The following options 3 and 4 estimate the costs of increasing the Special and Band 1 maintenance grant rates applicable for the 2022/23 academic year by different levels.

Option 3: increase in special rate of maintenance– adjacent and non adjacent based on maintenance grant rates for 2022/23 by €100, €200, €300, 7%, 10% and 15%

Increase in 2022/23 special rate of maintenance by various amounts

Option 4: increase in band 1 maintenance grant adjacent and non-adjacent from 2022/2023 rates by €100, €200, €300. 7%, 10% and 15%

Increase in 2022/23 Band 1 adjacent and non-adjacent maintenance grant by various amounts

Option 5: cost to reduce the qualifying distance to avail of non-adjacent maintenance grant from 30km to 24km

Description of measure

The review of the Student Grant Scheme recommended that an adjustment should be considered to the 2021 distance criteria to allow an increased financial support to students' whose normal residence was located under 45km from their further or higher education institution.

This recommendation was quickly actioned in Budget 2022 and the qualifying distance criterion for students to qualify for the non-adjacent rate of grant has been reduced from 45km to 30km, effective from the start of the 2022/23 academic year.

Difference between non adjacent and adjacent rate from September 2022 – (reducing the criteria for non-adjacent rate from 45km and above to 30km and above)

The current qualifying distance of 30km for the higher non-adjacent rate of student grant is believed to take into account a reasonable radius within which students may commute on a daily basis.

The estimated cost in further reducing the qualifying distance criteria from 30km to 24km is €6 million based on applicants awarded a grant in 2021/22. However, this is a demand-led scheme and estimates may vary based on awarded applicants on a yearly basis.

Option 6: cost of incrementally increasing standard income thresholds

Description of measure

The review of the Student Grant Scheme outlines that the Government should consider adjusting income thresholds to take account of changes in real incomes over time.

The income threshold to qualify for the standard rate of student grant has been increased by €1,000 and will be implemented in the Student Grant Scheme 2022 for the academic year 2022/2023.

Notwithstanding the change for the 2022 academic year, the Report recommends that this be reviewed annually.

The figures below identify the potential cost of incrementally increasing standard income thresholds:

This measure would increase the income thresholds across all Bands (excluding the special rate of grant which is indexed to social protection rates and the postgraduate fee contribution rate that was increased in Budget 2021).

This measure would lead to eligible students receiving an enhanced grant rate and would lead to some new eligible students receiving a grant but it is not possible to estimate how many additional students might be eligible for a grant.

Option 7: remove the provision which limits the deduction of holiday earnings to “earnings outside of term time”

• Full Year Cost: €8-11 million

Description of measure

Reckonable income under the Student Grant Scheme is household income from all sources including income from a student’s employment.

However, income from an applicant’s employment which represents holiday earnings outside of term time but within the reference period up to a maximum limit can be deducted from the total reckonable income assessed. The reason for the limit is to mitigate against students working so much during their tertiary education that it negatively impacts on their ability to fully participate in their course. This rationale was also highlighted by the recent independent review of the Student Grant Scheme.

In June 2022 Minister Harris announced an increase to the income disregard for holiday earnings outside of term time from €4500 to €6552. This measure will allow students to earn up to €6,552 during non-term time without it affecting their eligibility for a grant under the Student Grant Scheme for the 2023/2024 academic year, enabling students to have more income to address the cost of living expenses they encounter when attending college.

The measure is also intended to also help alleviate the skills shortages that have been identified in certain sectors of the economy by allowing students to work more hours during their academic breaks.

The option costed above would remove the provision which limits the deduction of holiday earnings to “earnings outside of term time”. If all students who can possibly benefit from the option do claim, the estimated cost using 2021/22 AY numbers, would be €8m and would benefit 7,350 students.

If both measures were to be introduced simultaneously, to limit the discount to €6,552 and include term time earnings, the cost is estimated at €11m and would benefit c 9,100 students.

Option 8: increase the post graduate maintenance grant rates to the same level as the supports for undergraduates across all bands

• Full Year Cost: €8.6 million
• 2023 Cost: €4.73 million

Description of measure

The review of the Student Grant Scheme recommends that the Government should consider extending maintenance support for low-income students who do not qualify for maintenance currently for postgraduate study in a similar manner to the support that is available for undergraduate study.

At present maintenance support for postgraduate students is currently limited to those who are eligible for a special rate award.

Currently maintenance supports for postgraduate students is limited to those who are eligible for a special rate award (income under €24,500 and who have a qualifying social welfare payment).

This measure would provide maintenance supports to postgraduates on the same level that is provided to undergraduate Students. In the academic year 21/22 there are circa 2,290 postgraduate students receiving a contribution towards their fees of up to €3,500 but not receiving maintenance.

Option 9: increase the post graduate fee contribution for all post graduate students

Increase the post graduate tuition fee contribution for post grads to €6,270

• Full year cost: €9.5 million
• 2023 Cost: €9.12 million

Increase the post graduate tuition fee contribution to €5,500

• Full year cost: €7.35 million
• 2023 Cost €7.06 million

Increase the post graduate tuition fee contribution to €4,500

• Full year cost: €4.56 million
• 2023 Cost: €4.38 million

Description of measure

At present, postgraduate students that are eligible for the special rate of grant receive maintenance grants similar to undergraduate students and receive a fee contribution towards the cost of their tuition of €6,270.

For all other postgraduate students, the tuition grant contribution is €3,500. This measure would increase the fee contribution grant for all eligible postgraduate students to €6,270 or €5,500 or €4,500.

This measure would increase the tuition fee contribution for c 2,290 postgraduate students from €3,500, allowing the state to contribute a higher proportion of the tuition fee that SUSI awardees pay towards the cost of post graduate studies.

Student Contribution Reduction

Under the department’s free fees schemes, the Exchequer provides funding toward the tuition fee costs of eligible undergraduate higher education students with students paying the student contribution.

The student contribution charge increased incrementally to €3,000 in the 2015/16 academic year and has remained at this rate during the subsequent years.

The State pays the student contribution (in full or part) on behalf of students who qualify under the student grant scheme.

In 2020/21 over 65,000 (approximately 45% of Free Fee Eligible students) students had all or part of their student contribution funding paid on their behalf through student support grants at a cost of c. €190 million

In 20/21 the amount paid directly by the students was €248 million.

There are two primary options available to reduce student contribution costs for undergraduate students:

• Flat reduction in the Student Contribution Rate
• Increase Student Grant funding to increase the income thresholds for SUSI free fee support

Option 1: flat reduction in the student contribution rate

It is estimated that c.80,000 to 85,000 free fees eligible students would benefit to the full value of any reduction and c 3,000 students would benefit to half of the value of any reduction (SUSI students in receipt of a 50% student contribution support).

€500 reduction to €2,500

• Cost: estimated €42.7 million

€1,000 reduction to €2,000

• Cost: estimated €85.4 million

Additional Estimated Costs for 2022/23 academic year

Net cost to the State includes the associated saving on student grants (student contribution paid by the State for student in receipt of supports).

Gross cost is the cost of implementing this measure without factoring in the associated Student Grant Saving.

Option 2: increase student grant funding to increase the income limits for the student contribution grant administered by SUSI

An alternative option may be to consider an increase the student grant budget to provide for an increased number of students to be eligible for the full or half rate student contribution grant.

A potential in this respect is to:

• increase the income limit for the 100% student contribution grant to €55,240 which would mean all students currently within the grant system would have their full contribution paid (This would cost circa €4.75 million)
• replace the 50% contribution measure with a measure to allow students to receive a contribution of €1,000 and set a substantial income limit. (The cost of this measure would depend on the number of students who were eligible under a new income limit)

Graduate Entry Medicine

Graduate Entry Medicine (GEM) is one of the pathways to study undergraduate medicine.

Graduate entry courses require applicants to hold a level 8 qualification prior to entry and completion of a graduate entry medicine degree confers a further level 8 qualification.

Students pursuing second level 8 degree courses are not eligible for free fees funding or for student grants, and therefore graduate entry medicine students have not qualified for these programmes since the introduction of this course.

The total level of fees charged to graduate entry medicine students is a matter for the higher education institutions, consistent with the principle of their institutional autonomy.

In order to widen access to GEM programmes, and give assistance towards the financial burden on each student pursuing these programmes, the fees of participating EU students are partly subsidised by the State via the HEA.

The HEA advise that in academic year 21/22 the state contribution is €11,950 per student with the balance of fees payable by the student.

Option 1: cost of increasing the contribution towards GEM fees

The HEA advise that, based on the 2020/21 GEM student numbers, the estimated costs of increasing the HEA contribution towards GEM (grant per student) are by:

• €5,000 per student is an additional c.€4.7 million
• €10,000 per student is an additional c.€9.5 million

The fee rates charged for all courses are a matter for the HEIs as autonomous bodies.

Option 2: Allow gem students access SUSI

Under the terms of the Student Grant Scheme, grant assistance is awarded to students attending an approved course in an approved institution who meet the prescribed conditions of funding, including those relating to nationality, residency, previous academic attainment and means.

To satisfy the terms and conditions of the Student Grant Scheme in relation to progression, a student must be moving from year to year within a course, having successfully completed the previous year or be transferring from one course to another where the award for the subsequent course is of a higher level than the previous course.

Students pursuing GEM programmes do so as second degree courses and consequently are not eligible for free fees funding or for student grants.

The Student Grant Scheme review comments on the issue of Graduate Entry Medicine and states that a wider issues remains as to whether greater flexibility in the criteria for the student grant scheme could be considered in areas of critical skills shortage reflecting graduate entry routes.

There are significant policy, legislative and funding considerations, as well as wider implications, if the current treatment of graduate entry medicine was amended.

Other funding available to support gem students

In June 2022, Government approved a revised approach to funding of medical education places including GEM. This included addressing sustainability challenges arising from cross subsidisation from fees of non-EU students and additional places for Irish/EU students on a phased basis.

Students on graduate entry medicine courses may be eligible to apply to the Student Assistance Fund for financial support. The guidelines provide that students with a previous higher education qualification at the same NFQ level may be considered for support on a case-by-case basis and subject to available funding.

The minister has recently announced that holders of Bursaries under the 1916 Bursary Scheme may continue their bursary if they wish to pursue Graduate Entry Medicine. Full details of same are available on studentfinance.ie.

Student Assistance Fund

##Option: increase the funding available through the student assistance fund for students experiencing financial hardship

The Student Assistance Fund (SAF) provides financial assistance to students experiencing financial difficulties while attending higher education. Students on full or part-time courses leading to a higher education award (NQF level 6-10) in the universities, institutes of technology and other approved colleges can apply for the SAF. The Student Assistance Fund typically provides financial assistance to students who are having difficulty covering the following kinds of expenses:

• Books
• Class materials
• Rent
• Heating/lighting bills
• Food
• Travel of an urgent or essential nature
• Medical expenses, i.e. doctor or dental visits
• Expenses associated with family breakdown
• Expenses associated with bereavement
• Expenses associated with accidents
• Childcare
• Compulsory study abroad

The costs of the above expenses has increased over the last year and these additional costs are affecting students who are most experiencing financial difficulties while attending higher education.

The Student Assistance Fund ordinarily supports c 14,000 students to the tune of on average €650 without the additionally provided through COVID funding.

When COVID funding was available, the SAF supported 21,000 students to the tune of on average €850.

We can see from these figures that there has been an increase in the number of students accessing the fund and a need for a higher allocation per student over the last two years. This evidence along with the increased cost of living for students and the decision to allow Section 60, temporary protection students access the fund will create an expected increase in the numbers of students who will require assistance from the SAF.

Second chance students

Option: reducing the criteria from 5 years to 3 years

Article 13(6) of the Student Grant Scheme states that “A mature student pursuing an approved course shall be known as a Second Chance Student where the student:

• “is returning following a full 5-year break in studies
• ”previously attended but did not complete a course
• ”is returning in order to pursue an approved course at PLC, undergraduate or postgraduate level in the relevant academic year”

This measure would reduce the period of time that a second chance student as referred to above has to wait before returning to study from 5 years to 3 years. This measure would be in line with the ambitions in the National Access Plan which prioritises entrants from socio-economic groups that have low participation in higher education, including mature students.

It is not possible to cost this measure as we do not know the number of students who may potentially avail of same. This measure if implemented would also require a similar measure under the free fees scheme.

Option: Extend supports to more flexible forms of learning including blended/online and part-time

The review raises the issue of flexible learning. Many individuals, particularly those from lower-income families or disadvantaged groups, may not be in a position to engage full-time in higher education and the review finds that many of these students would have considered part-time if the option had been available to them.

It also suggests that facilitating students to complete their third – level education on a more flexible basis would also mean that some students could remain part of the labour force & contribute to the Exchequer via taxes on employment income. The review notes that:

• 47% of postgraduates and 25% of undergraduate students surveyed under the review said they would have, or might have, studied part-time if given the option to do so and still receive financial support
• older (25+) undergraduate students were more likely to have considered a part-time option, with more than one in three saying that they would have considered studying part-time. This compares to 22.6% for younger students
• the consultation via the National Plan for Equity of Access to Higher Education raised the need for the sector to provider flexible learning options for people disadvantaged by socio-economic barriers, mature students, students with a disability and members of the Traveller community

The review highlights that the issue of potentially expanding part-time delivery of tertiary education in Ireland is a complex one and the review outlines that significant planning would need to be conducted at both national and institutional level to manage the significant impacts on educational institutions. In particular, a clear understanding of what constitutes part-time, blended and other forms of learning needs to be established at a national level to guide policy and aid implementation/roll out. Further, individual educational institutions would need to plan if they are to expand their part-time education options including which courses should be part-time. It further notes that once the education sector is in a position to identify what potential options could be made available further economic modelling would be required at this stage to consider the exchequer impact.

The review noted that initially the level of student grant support for part-time/flexible/on-line students could be set at a lower level than applies to full-time students. The review outlined that Indecon do not believe that the same level of maintenance support would be needed, given a greater ability to continue working while studying, and lower transport and other costs. They also recommended that supports should only apply to households where annual incomes are below specified levels.

The review also noted that there is merit in considering the proposal that a minimum threshold for eligibility of part-time courses based on that course’s European Credit Transfer and Accumulation System (ECTS) level. Further, individual educational institutions need to plan if they are to expand flexible education options and which courses should be provided in a flexible manner.

The review has highlighted some varied approaches in Europe with respect to part-time undergraduate fees. The review notes, for example In Scotland, Sweden and Austria, part-time undergraduate students are charged no tuition fee. Part-time students are also treated comparably to fulltime students in England, Wales and Northern Ireland, in the sense that tuition fees are levied but supported by loans.

On 5 May, the minister set out a new funding and reform framework for higher education. In prioritising core funding increases, the intention is that quality of outcomes will improve, the agility and responsiveness of higher education will be strengthened and the reputation of Ireland’s higher education system will be enhanced, including in international rankings.

Five priority strands of work on which progress will be made are identified in the funding and reform framework:

• enhance quality and international standing of the higher education system across the three missions of teaching and learning, research and engagement
• drive skills and engagement – with a particular focus on essential public services
• enhance student participation and success with a focus on under-represented groups
• create a unified knowledge and skills system which is balanced and integrated
• address cost as a barrier to higher education and improve student supports

The minister convened a Funding the Future Implementation and Review Group to support the development, implementation and review of a reform agenda at national and sectoral level to meet the ambition contained in the funding and reform framework.

The issue to extend supports to more flexible forms of learning including blended/online and part- time are being examined by the department and its agencies and the Funding the Future Implementation and Review Group but this is a medium term project and for this reason it is too early to estimate associated costs with part time provision as the definition of same is yet to be determined.

It should be noted that the Student Grant Scheme is a demand led scheme and estimates may vary based on awarded applicants on a yearly basis. The following table forms the basis for the estimated costings provided in this paper.

Where changes to the Student Grant Scheme are costed, these do not include costings for operation costs.

The table contains the number of students who were paid a student grant by SUSI for the 2021/22 year as of the 29 July 2022 and the numbers have been adjusted between bands to reflect the change in distance criteria for the 2022/23 academic year.