The cost of education

For those wondering how much it costs to put a child through the Irish education system, Bank of Ireland life have done some research and provided us with the answer: €67,149. Of course the company is being self-interested in publishing this information, as the key message it is wrapping around the data is that parents need to save money early on, preferably just after the child’s birth.

The overall figure of €67,149 is the total sum across all levels of education.  According to the bank, third level is by far the most expensive: primary education costs €12,326, and secondary costs €12,981; but sending a child to university or college costs €41,842. And if you were wondering, no fees at any level have been factored into these figures, other than the student services charge at third level.

It may need to be said in passing that the bank does not raise our levels of confidence in financial institutions by finding it difficult, apparently, to add up these sums: while the total is €67,000 or so, the bank’s statement announcing the research puts it at €70,000. Oh well.

What is clear from the information, however, is that education is expensive, and that even in a system that presents education as ‘free’, the cost is very substantial. It is easy to see that for families without significant resources education presents a very significant burden, and moreover that to allow a child to continue into third level may be just too much. In that setting, ‘free fees’ provide very little assistance, but the cost of offering this benefit to relatively wealthy families reduces the capacity of the state to give necessary additional support to the disadvantaged.

There are two key public policy objectives for education: to ensure that it is of the highest possible quality. and to ensure that all can avail of it. We are increasingly failing under both headings.

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15 Comments on “The cost of education”

  1. kevin denny Says:

    Yes but let us not forget the other side of the equation: the substantial returns to education. As a round figure, a degree increases your earnings by about 30%. I don’t have the numbers to hand but say a non-graduate makes €25k, increase that by 30% and add up over a lifetime, discounting it annually by 5% and you get 25000*1.3/.05=€650,000: serious dosh that dominates the cost by far.
    So you can see how our system whereby higher education is funded from general taxation but goes mainly to the well-off is a vehicle for exacerbating inequality. Labour Party take note.
    Of course, this is not including the non-financial benefits: more educated people typically participate more fully in civic society, generally have better mental and physical health and get to pass some of these benefits to their kids for example.

    • wendymr Says:

      Well, that’s an average. The benefit to income really does depend on the course of study and subsequent career followed. Now, where was it I read about a university contract researcher with 10+ years of experience and a number of well-regarded papers to his name who walked away to retrain as a plumber, and ended up earning nearly twice what he’d earned in the university sector…?

      • kevin denny Says:

        Sure its an average though actually a 30% premium is probably on the low side: a 45% premium would not be unrealistic. So people who go into medicine make much more than humanities. But very very few people end up worse off financially because of going to college. And when we need to think about policy isn’t it boring averages that count & not particular individuals like the PhD-plumber or the random taxi-driver beloved of certain politicians? Bill Gates, after all, dropped out of Harvard but this has no significance for education in general.
        Remember for an investment to make sense the benefit need only be higher than the cost: here we are talking about much bigger margins.

  2. colummccaffery Says:

    Here we go again! Would all those who want fees reintroduced please state the income level they have in mind? “Well off”, “relatively wealthy families”, “disadvantaged” won’t do!

    I’ve said this before and I’ll try it here again. Please consider a family with two or three kids with an income between, say, 30k and 50k. They are getting by and come what may, they plan on sending the kids to college. To describe them as wealthy would be bizarre but to say that “free fees” would “provide very little assistance” misunderstands the financial position of many – perhaps most – families.

    God, I’ve been at this for years:

    • Perry Share Says:

      Colum, you are dead right. The proponents of fee increases (noting that Ireland already has higher 3rd level fees than most EU countries) are notoriously silent on the details. I have yet to see an outline of a) what fees would be levied and by whom they would be determined; and b) what mysterious mechanism is going to turn the levy of increased fees into a means of increasing equality in education. I remain to be convinced.

      For me the key reason to develop a new financing model for HE is to address the fundamental inequality between ‘full time’ and ‘part time’ learners, which has no basis in logic whatsoever.

    • kevin denny Says:

      You don’t have to define an income level since it already is defined by the Higher Education Grant Scheme. That covered fees & maintenance. Now it covers only maintenance obviously, re-introduce fees and simply adjust it back to what it was, allowing for inflation.
      Researchers around the world have also been at this for years- I’m not familiar with your research- and the evidence is very clear that credit constraints are not that important with regard to higher education. It is long run factors that matter so people should stop waffling & dissembling and if they are serious about fairness in education do something about those.

      • Perry Share Says:

        I am not claiming to have done any research on this topic. I just want some clarity as to what the proponents of increased fees want to implement. So, to reiterate the (unanswered) questions I posed earlier on this blog:

        a) given a hypothetical annual unit cost per student of €7500 for a student on (say) an applied social studies programme, what fee should be charged? What is the criteria by which such a fee will be set?

        b) If students are now to pay (say) €3750 per annum (half the real cost) rather than the current fee of €1500 per annum, what is the specific mechanism by which this increased payment facilitates the enhanced participation of those currently excluded from third level education?

        These are the practicalities of any introduction of increased fees, and are the types of questions that students and their family members are likely to want answered!

        • Perry, as for (a): it’s impossible to say in the abstract, but the significant point is that the fee should be affordable and should be the same for all programmes – I have elaborated on this several times previously! As for (b), the answer is simple and obvious: because the universities or that state can now re-direct some of the additional income to develop access programmes more aggressively. Rather than pay money to the wealthy, we should pay it to the disadvantaged. Isn’t that obvious?

    • Colum, I have actually addressed this point in several posts in this blog! I have always accepted that a tuition fees framework needs to address the position of middle income families…

  3. Perry Share Says:

    OK, to move this along from the abstract to the concrete. If the ‘real cost’ of providing a student place is €7500, and some fee is to be levied to meet some of that cost – one that is more than the current fee of €1500 – how is that fee to be determined in such a way as to make it ‘affordable’? To whom should the fee be affordable and how will the affordability be determined? In particular, if I cannot afford to send my children to college at the current fee of €1500 per annum, how is an increase to €3000 per annum going to be more affordable for me?

    The further implication seems to be that if the institutions receive more money from fees, then resources will be made available that will be spent on increasing access to education and so reducing social inequality. So, say an institution receives an extra €7.5m in fees (presuming that all current student can ‘afford’ to pay €3000 per annum. This is 5000 students x additional €1500 per student). This means that the government can do 2 things:

    a) continue to fund the institution from Exchequer funds to the same extent as now. Thus the institution will have an additional sum of money to spend on better services to students, new buildings, competing for staff on international basis &c. This will address the issues of underfunding that FvP and others have been identifying for years. However it will not produce any extra Exchequer money to support those currently excluded from education. Indeed it is likely that an imposition of a tuition fee of €3000 per annum might help to exclude further students. The only option is for the institutions themselves to allocate some of their additional income to ‘deserving’ students in the form of scholarships &c. I presume this is what the proponents of fees have in mind.

    b) the government can reduce its central funding to the institutions in line with some or all of the fee received, as it has been doing up to now. This will potentially free up some Exchequer resources to spend on increasing access to education, though given that earmarking of state income does not happen, this money could equally be spent on foreign aid, unemployment payments or support for the greyhound industry. There would be less or no additional income to the tertiary sector, so the underfunding issues that have been identified by FvP and others would be addressed insufficiently or not at all.

    So it seems to me that what is being proposed is an increase in fees, the money to go to the institutions as additional income, some of which will be redistributed to deserving poor students, with the institutions to introduce systems of ‘financial aid’ on the US model. Am I right here or is it more sophisticated than this? And if so how?

    • Well, Perry, for now all of this is speculation, as there are no proposals on the table. In fact, when (note I don’t say ‘if’) student contributions are (re-)introduced, I expect it will all be quite different. For a start, I suspect that the dialogue around loans, graduate tax and similar stuff will eventually bring us to what will in effect be a deferred payment, meaning that fees will be payable, but only later in arrears when the graduate has employment that produces enough income. This would delay any financial benefits (whether to government or the universities) by about eight years, I guess.

      But let us say that fees were introduced now. My preferred model would be a flat rate fee determined (as is their statutory right) by the universities themselves. At current prices I would put it at €4,000 p.a. I would attach an obligation on universities to admit all qualified applicants (i.e. subject to available places, points or whatever), and for the universities to guarantee access by redistribution of some of the fees of those who can afford them to those who cannot. Whether a student would benefit from such support would depend on an assessment of their position, and they might either be given a scholarship/grant, or a loan (preferably on zero interest). Something like that.

      • Vincent Says:

        Yes, all very well but this is not in any way coming at the problem as the Exchequer sees it. They and their actuaries view the bill in 2030, it will be immense and getting bigger every year.
        I think it’s a question of what exactly they are going to do. And I believe they are ideologically tied into removing the Universities and all other Institutes from any Exchequer Vote. And this in any form what-so-ever.
        They will be something of a banker when you need a new building, but only one where they have the control. And only one where it will be a once off payment.
        I think it will get to a point very soon where the Fees will be the only source of certain income that you will have.

  4. John Fine Says:

    My first semester at the University of Texas fall of 1968 cost me a total of $150.00, books included. Has the cost of providing an education really gone up that much?.

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