Paying for higher education

All Irish universities derive their income from a number of sources. However, most of it still comes from the state, by various different routes. There is the recurrent grant, which universities receive in order to teach undergraduate students, and which is weighted in accordance with certain assumptions about the costs of providing the various programmes. This is supplemented by the student fee, which under the ‘free fees’ system operating since the late 1990s is also paid by the state for all Irish and EU students. Both the recurrent grant and the fees are paid by the Higher Education Authority (HEA). Students from outside the EU have to pay a full fee, designed to cover the cost of their education. In addition, universities will receive money from research grants and contracts, much of which again will come from public money (through research councils, or the HEA in the case of the Programme for Research in Third Level Institutions, or through Science Foundation Ireland).

Non-state income will consist of international student fees (see above), research contracts with the private sector, or various commercial activities.

Public expenditure on higher education has grown very significantly over the past decade or so, but the increase in money has arguably not kept pace with the significant growth in student numbers and the rate of inflation as experienced by universities (driven overwhelmingly by pay increases and increases in the cost of equipment and consumables used by higher education institutions). ‘Our’ inflation is considerably higher than the consumer prices index.

At the same time, Irish universities are competing with institutions in other countries that are considerably better funded. Universities in England have had the benefit of so-called ‘top-up’ fees paid by students, and shortly the institutions there will be able to determine the level of these fees without restriction. At that point English universities will be able to call on resources that are much higher than those available to third level institutions in Ireland, and it is possible that this will have a detrimental effect on the ability of our colleges to compete. US universities typically enjoy income which is a multiple of what we would have here.

Into this already very tricky environment comes the likelihood that, in the Estimates (decisions on public expenditure) for 2009, there will be even more severe cutbacks because of current economic conditions. Most universities here are already running deficits, and this will seriously exacerbate the situation.

So what needs to be done? First and most importantly, there needs to be an acknowledgment that universities are under-funded, and are too reliant on just one source of income. Secondly, we need to start thinking about how this significant risk can be spread. It is not generally popular to say this, but it is hard to see how the resourcing issues can be addressed without looking again at the question of student fees. While there has been at least some increase in participation rates in higher education by those from a disadvantaged background, the majority of students still come from the middle class. The problem with the free fees system is that it allows significant public money to be spent on assisting the better off, while investment in supporting the education of the disadvantaged is totally inadequate.

If we are to compete internationally, and if we are serious about widening access to higher education, we need to look again at ‘free fees’, and at least consider the introduction of some form of student fees, accompanied by a much more effective system of grants and supports for those who are not well off. If this nettle is not grasped (and politicians of all parties are reluctant to take it on), it is likely that Irish universities will run into serious debt, will fall behind international competitors, and will fail in their mission support the disadvantaged.

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5 Comments on “Paying for higher education”

  1. I blogged about this some time ago –

    However, this argument might be under pressure these days since the publication recently of the salaries being given to some Irish academics. Do you have any views on this?


  2. universitydiary Says:

    Whatever the rights and wrongs may be of higher salaries for some academics, such salaries have very little impact on the overall budgetary environment: they account for an extremely tiny part of overall costs, and in any case are often externally funded.
    As it happens, I do intend to write about academic and other university salaries in a future post.

  3. Fred Says:

    With a decent system of grants and tuition waivers, student fees are not bad at all. Although very few EU countries’ universities do actually take fees, some started in the last years to introduce relatively low, more symbolic fees. Arguably the biggest benefit results from shorter study times, as students feel more responsible to finish early. This will have the largest impact on the financial support for university.

  4. Piaras Kelly Says:

    One of my biggest worries is that the lack of interest about the reintroduction of university fees could have adverse long term effects. I can’t remember where I read the article, but it had an interesting analysis about the economics of paying for university education. If fees are to be reintroduced, this would need to be flagged well in advance in order for parents to adapt their savings to take this new financial burden into account. Therefore the longer we put off this awkward topic, the bigger impact it will have on universities as fees shouldn’t be reinstated overnight.

  5. […] fees: facing up to reality In this post I drew attention to the funding problems facing universities, and I pointed out that it was […]

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