Save the date: September 7 – Policy Forum on Higher Education Funding

I am organising a policy conference on the above topic to be held at the RIA on Dawson Street from 9.30-12.30 on Thursday, September 7.

The main focus will be on the potential role of income-contingent student loans in HE funding.

The morning will begin with short presentations by five speakers, including Bruce Chapman (Australian National University), Lorraine Dearden (Institute for Fiscal Studies and University College London), Charles Larkin (Trinity College), Senator Aodhan O Riordain (to be confirmed) and myself. This will be followed by a 60-90 minute discussion session. The event will be chaired by Frances Ruane (ESRI).

I’ll post a detailed programme here when it’s finalized.

Update: Senator O Riordain has confirmed and the final programme is available here.

One reply on “Save the date: September 7 – Policy Forum on Higher Education Funding”

Income-contingent Students Loans: a Shameless, Brass-necked Exercise in Rent-seeking

The student loan issue is back with us – again, I see. Bit like the Plague. Flares up; goes dormant – then flares up again.

The Student Loan story is actually two separate stories. The first is the persistent and determined effort to create a new, and very valuable, long-term rent-seeking, opportunity. The second is an equally determined effort by our slightly democratic parliamentary parties to put clear blue water between themselves and something unpleasant – the need to increase taxations to fund the uncontrolled increases in third-level costs. It is the first of these two separate stories that actually relates to student loans – the second is merely a messy distraction. Opponents of student loans must concentrate on the loan story and avoid being dragged into the third-level funding story – not matter how determined the loan proposers attempt to conflate the two issues into a contentious mess. Because that is how the student loan story has been presented thus far.

A graduate level education is a valuable economic commodity – and here in Ireland it is considered a desirable, albeit a costly, public good. The Irish taxpayer effectively picks up the majority of the various costs involved; the undergraduate consumer pays the balance (which is not insignificant). College managements are demanding more money. This is the politicians’ dilemma. Voters do not like taxes. So, what should the politicians do?

Well, the correct bureaucratic and rent-seekers response, is to establish a privately operated student loan system (any state system is axiomatically inefficient). I have previously described any student loan system as mad, bad and a quite dangerous economic venture. It has to be very strongly resisted and, hopefully, consigned to oblivion. Student loan systems (of all stripes) are inherently regressive; socially, financially and economically. They have to be, otherwise they would not attract the appropriate rent-seeking private lenders, and the state’s taxpayers would continue as heretofore to fund college educations. The proposed student loan system must be a pretentious, administrative muddle – to disguise its true objective. The taxpayer must continue to back-stop it – even though it would be operated by a private company. A privately operated student loan system cannot be simple, equitable or efficient – despite all the carefully crafted propaganda and high-minded pronouncments of its proposers. Only the willfully blind – or the most intelligent, will be unable to acknowledge a privately operated student loan system for what it really is – a massive rent-seeking exercise.

If third-level education is in need of more funding (and this is difficult to refute) – then the managements of the various colleges need to institute and carry through serious pedagoical reformations before they get one extra sou of taxpayer (or undergraduate) monies. This is the one issue which our parliamentarians wish to avoid. They would have to engage in a mighty disagreeable contest with college managements. A privately funded student loan system would let them off the hook. So, they are attempting, so far successfully, in shoving the issue of third-level funding as far as possible into the distant future and clothing it in an artful veil of hard-to-contradict value judgements.

Instead of warning the public against turning the third-level sector into a predatory financial system that will ‘commodify’ education, the promotors of student loans (of whatever variety) disuise its regressive rent-seeking activities by emphasising the better overall access, the social fairness and the improved quality of educational experience which will result from the adoption of a student loan system – rather than continuing with our current inefficient and economically wasteful taxpayer funded system. It would be hard to deny the value of the three higher educational characteristics just mentioned; its just that they are actually completely disconnected from, and irrelevant to, students being encouraged to take on a significant debt load, a load which cannot confer any financial or economic benefit on the student – but will ensure they become endentured bondsmen to a private financial institution. An additional, and lucrative rent-seeking income stream is the aim of the promotors of student loan systems, not the overall economic wealth creation or overall prosperity of our country. Be aware.

On a slightly different, but not unrelated matter. If student loans become operational, then how will the pedagogical quality of the now financially commodified course programmes be attested? At present there is no formal training (nor qualification process) in place to ensure college teachers are competent to deliver course programmes to the standard that paying customers may expect, and demand. How will the customers be safeguarded? Students are in a very vulnerable place: complaints are not welcome.

Finally, if after a meaningful intellectual engagement with the two separate stories at hand, student loans are considered to be essential, then we already have an existing, straight forward and very efficient state revenue collection system in place. I am informed that the rates of non-compliance and defaulters are less than 5%. But, economic theory stridently asserts that private enterprise would always be more efficient than a Government one. Like hell it would!

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