Sir, – Further to "Third-level college funding to be linked to performance" (July 11th), an income-contingent loan system is unsuitable for two main reasons. First, it would create a whole generation of indebted young people even before they have left full-time education. This is a group who are facing an increasingly uncertain working environment, with little income certainty, excessive childcare and medical costs, and rising rent prices and mortgage requirements. A loan-based approach runs the risk of exacerbating existing national social issues, such as the housing crisis and the pressures on the health service.
Second, the creation of such a large group of debtors would naturally involve varying, and probably higher than normal, rates of default, due to low incomes and willingness to repay. The cost of unpaid loans would be borne by the State and its citizens, except there would be the additional costs generated by the new system.
Without sufficient research and data on this proposed system, there could be a range of unintended social consequences and a framework which is just as expensive as the current system. – Yours, etc,
Dr RICHARD SCRIVEN,
Ballinlough, Cork.
Sir, – In spite of the urgent need for a viable scheme of funding for the third-level sector, the Government would do well to consider carefully the full implications of any new scheme it introduces. In a testimony before the US Senate last week, John Lettieri, co-founder of the Economic Innovation Group, drew a possible link between the increasing rate of student indebtedness and the lack of appetite for risk-taking and entrepreneurship.
He informed the US legislators that “millennials are on track to be the least entrepreneurial generation in recent history”. In looking at why this should be, he stated that “Millennials carry an ever-growing burden of student debt, which limits both preferences and capacities for risk-taking. Between 2004 and 2014, there was an 89 per cent increase in the number of student borrowers, as well as a 77 per cent increase in the average balance size held by student borrowers. While only 30 per cent of students took out loans to finance their education in the mid-1990s, half of all students borrowed during the 2013-2014 school year”.
He suggested that economic factors including indebtedness would likely adversely affect “millennials’ preference for risk and their financial ability to choose entrepreneurship”.
In view of the importance of not placing all our hopes on the unpredictable environment of foreign direct investment and of the desirability of fostering our home-grown entrepreneurs, it is vital that the Minister for Education and the Government take all possible implications into account in assessing a future course of action. – Yours, etc,
ANNE O’FARRELL,
Cabinteely,
Dublin 18.