Should Businesses Contribute to 3rd Level Education Funding?

Irish higher education is becoming increasingly underfunded and understaffed and unless something is done a crisis is looming.  Funding has been falling while student numbers have been rising.

Between 2008 and 2014 the staff-student ratio rose by a quarter from 1:16 to 1:20, while funding was reduced by a quarter.

Lecturer workload is rising and morale is suffering. Many staff have rather precarious employment terms resulting in a lack of stability and continuation, which can have a detrimental effect on students’ quality of education.

Irish third level institutions are continuing to perform at a high standard internationally but, as the Higher Education Authority’s “System Performance” report in 2014 showed, there is a financial hole which can’t be plugged by the student registration fee.

The now €3,000 student registration fee is a very real hardship for people just above the grant cut off point, who have spiralling rents to pay along with all the other expenses of sending children to 3^rd level.

The TUI recently suggested a 1% levy on corporate profits to generate additional funding for the higher education sector.  This would be ring fenced to ensure it was used for 3^rd level funding and not simply an increase in corporation tax.  It could be used to employ more staff and reduce the student registration fee, and would be in addition to exchequer funding, not instead of.

The amount generated would be significant. For example, if the levy had been in place in 2014 the take would have been  €369.4m.

There is no doubt that extra funding  is badly needed but is this a good idea?

Yes because:

• The corporate sector benefits greatly from the skills of Irish graduates and this would further enhance the quality of graduates becoming available.
• Corporation tax in Ireland at 12.5%, is low by international standards and a 1% levy would not inhibit investment or employment creation.
• Businesses should be an integral part of society and have a responsibility to the area they operate in. Cooperation, including financial between local businesses and colleges is important to job creation as education can be tailored to suit the needs of local businesses.
• While there are many businesses already contributing towards education in terms of research, scholarships or financing courses for staff there are many who don’t and this would be a way of broadening the base of contributors.

No because:

• Businesses don’t only have corporation tax to pay. There is already 23% on services and 30 – 40% on personal income. Smaller businesses in particular struggle to pay rates, water charges, property taxes etc. already and the idea of paying towards young peoples’ college fees might just be a step too far, even if these expenses ultimately reduce their corporation tax and hence the amount they would be paying in a levy.
• Education benefits the students and therefore they should pay themselves through student loans etc. as they will, generally speaking, have higher salaries and a better lifestyle than if they hadn’t gone to college.
• There would be no need for this if taxes already being collected were spent effectively and the sector financed properly in the first place.
• The consumer could end up paying in the long run as businesses may pass on the expense rather than absorb it.
• Large businesses who already contribute in terms of research facilities and cooperation with 3^rd level institutions may well resent the additional imposition of a levy.

Of course the ‘who finances higher education’ debate is not new.  There are two fundamental questions underlying the debate: what is higher education for? And to what extent is it an entitlement?

If college is simply to prepare young people for higher paid jobs, then perhaps both students themselves and private industry should be footing more of the bill.

But if 3^rd level education is considered a benefit to society as a whole then perhaps the state should pay more.

If it is an entitlement then it should be free but it not then the students should pay more.

Many would argue, perhaps rightly in some cases that a college degree is not always, or should not be, a requirement to get a decent job.

But whatever the outcome of the ideological debate the fact remains that funding is in or approaching crisis and we need a new sustainable funding model for third level education.

The problem is further exacerbated by demographics. Ireland’s relatively young population means that even maintaining the current third level participation rate requires that the number of full-time new entrants to the system must grow by at least 25% by 2030.

Student loans may sound good but we would need to not follow the US system which is merely creating a problem further along and students are leaving college with huge debts already weighing them down, and where it is suggested that student loan debt may even exceed credit card debt.

Maybe the TUI suggestion has some merit but really we could do with a complete review and reform of the present system. Sticking on another plaster is not enough to cure the patient this time.

All the parties’ election manifestoes recognised the problem and promised to address it, so it must now be a matter of urgency for whatever government is eventually formed.