There Are Bad Side Effects to Greater Student Loans

Andy Storey

Andy Storey is a lecturer in political economy at University College Dublin and a board member of human rights group Action from Ireland (Afri).


The Irish government’s funding support to universities fell from €1.6 billion in 2005 to just €939 million in 2014. This, coupled with rising student numbers, amounted to a cut of 25 percent in state funding per student and to a 30 percent increase in student-to-staff ratios.

The provost of Trinity College Dublin sums up the situation: “We have overcrowded classrooms. Our staff-student ratio is way out of kilter … I and other university presidents don’t think it is sustainable at current funding levels.”

The president of University College Dublin (UCD) independent.ie/opinion/comment/we-need-a-student-loan-system-to-solve-our-college-funding-crisis-30631469.html">wrote, in 2014, of his shock after joining UCD from his previous position at Durham University to discover that the number of academic staff at UCD was about the same as at Durham – despite the fact that Durham’s 16,000 students contrasted with more than 25,500 at UCD.

Outside the university sector, the independent.ie/irish-news/education/going-to-college/thirdlevel-funding-crisis-worsening-31536869.html">position of the Institutes of Technology (ITs) is possibly even worse. Funding for ITs was cut by 35 percent between 2008 and 2015 while student numbers rose by 32 percent, and 9.5 percent of lecturing jobs were lost.

One response on the part of the universities and ITs has been increased reliance on temporary, low-paid staff to perform essential teaching and administrative tasks, adding labour exploitation to the cocktail of problems assailing the third-level sector. Some academic staff are taking home salaries for this casual work of just €5,000 per annum.

Now a new report on the funding of higher education in Ireland estimates that the numbers going to third level will grow by 30 percent over the next decade and that an extra €1 billion will be needed to keep even the current (problematic) levels of service in place.

Media coverage of this report has tended to focus on one of the funding options proposed to deal with the challenge – the introduction of a new student-loan scheme whereby students would borrow money to pay for their education and start paying it back if and when their future incomes exceeded a certain level.

One of the issues highlighted by critics of the student-loans option is the impact it would have on access to education for disadvantaged groups. Independent Senator Lynn Ruane (former TCD student union president) makes the point forcefully:

“As a single mother from a disadvantaged background who entered university as a mature student and through an access programme, I could not have enrolled at Trinity under the proposed loan system. The level of debt we are proposing burdening our young people with would have been too much for me to shoulder and I imagine there are thousands of people across the country who would be in the same position.”

International research by Professor Susanne Soederbergh supports Ruane’s arguments and also documents, for many students, “the devastating and humiliating social consequences of default”. Short of default, graduates seek to cope with large debt burdens by measures such as moving back in with their parents, working more than one job and deferring having children.

Soederbergh goes on to highlight how, in the US, student loans have become “a highly lucrative venture for private lenders”. This relates to broader trends in contemporary political economy, in particular the phenomenon of “financialisation”, through which money is increasingly made not by investing in, and producing, actual goods and services but by various forms of financial speculation based on debt – mortgages, credit cards, payday loans, and so on, as well as student loans.

Financialisation tends to deepen inequality, in part because increasingly indebted workers and consumers are placed in an ever weaker bargaining position vis-à-vis employers. For example, a graduate weighted down with heavy student loan debt will typically be willing to work longer hours for relatively less pay in order to be able to maintain debt repayments.

Yes, in theory, unemployed people or those earning below a certain income threshold (the Irish expert group suggests €26,000 per annum) might be exempt from making repayments, but, as Soederbergh and others show, most people are disciplined by the weight of social expectations to try and pay back what they owe.

This relates to another likely consequence of student loans – the tendency of students to opt for courses that promise some immediate financial return in terms of employability over courses that promote critical thinking and reflection.

And this, in turn, feeds into what President Michael D. Higgins decries as the way in which “the language and rhetoric of the speculative market has become embedded in the educational culture” itself.

Third-level colleges are increasingly expected to contribute to the economy, narrowly defined, rather than to society in the sense of what my UCD colleague Andreas Hess describes as the safeguarding of intellectual vitality.

This growing philistinism was evident earlier this year when the vice chancellor of Queen’s University Belfast claimed that “Society doesn’t need a 21-year-old who is a sixth century historian.”

When education is reduced to an economic investment, to be funded by loans that themselves allow financial firms to generate increased profits, the very fabric of society itself is coarsened and debased.

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Andy Storey: Andy Storey is a lecturer in political economy at University College Dublin and a board member of human rights group Action from Ireland (Afri).

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Mary Alacoque Ryan
at 14 July 2016 at 09:37

University fees, in whatever guise they may appear, will continue to polarise Irish society. The better-off student will not need a loan and the people who have been allowed to slip to the other end of the financial spectrum will simply not be able to take on those loans. Our young people should be gifted with first, second and third level education completely free and they should be allowed to face the labour force without any financial burdens.
A more equal society benefits all of us.

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