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Column For our education sector to thrive, it needs to get commercial sense

We need to construct curriculums with international relevance and figure out fairer ways of funding education in order to compete globally, writes Aaron McKenna.

THE SCALE OF additional work being done by our third level education sector is easy to miss if you’re outside the fold: the number of students attending a University or Institute of Technology increased by 26 per cent in the five years to 2011, and will increase by another 25 per cent by 2030.

A report by Grant Thornton released this week points out that between our seven universities and 14 ITs, some 180,000 people were enrolled in full or part time courses in 2011, supported by 21,800 educators and other staff. By 2030 there will be 225,000 students enrolled.

Nearly 6 per cent of the adult population of the country is enrolled in higher-level education in any one year. It is the unarguable cornerstone of our success as a nation and our brightest path of return to prosperity as we continue to attract high tech, high skilled investment jobs and export to the world at large.

Funding slashed

Through all of this, government funding for the sector has been slashed by a quarter. Hundreds of millions of euro have disappeared from higher-level education budgets every year. This has been dealt with piecemeal, with increases to student enrollment fees in our ‘free’ sector and cutbacks in services.

Government funding is falling away, and it will not be easy to replace. More unto the point, if government income for the sector is so volatile we should probably look to other ways to fund it. Every government says that education is the cornerstone of our success, and then they go and slash the budgets for it when they need to protect some spurious-but-vote-winning payment or programme elsewhere.

I’m not sure I’d like to rely on that kind of eccentric logic to secure the prospects of our future learners.

A sector that has become fat and complacent

The Grant Thornton report suggested wide variety of steps that the sector could take to secure more reliable funding for themselves. Most of the suggestions read like an essay that could be produced by a business degree student in the first semester of their first year. When you read between the big simple lines, you come away with the impression of a sector that has become fat, happy and complacent on the teat of government money.

International students are one of the most lucrative revenue sources for any higher education institution. They are generally from wealthy backgrounds and they usually pay full fees for their courses. Wealthy students from China are a noted growth segment in the luxury car sales business in the US these days. They’ve got cash and they want to be educated abroad.

As the report points out, Irish universities are only getting 1 per cent of their income from this source and the number of full time enrollments from foreign students has actually been dropping. This is despite flashy government advertising campaigns and initiatives aimed at increasing enrollments.

It’s hardly surprising why we’re seeing stagnation here: Irish universities haven’t been doing enough to put themselves on the international ranking tables, nor have they really put in support behind international students that builds a reputation back home to refer new business in.

Learning of international relevance

Curriculums haven’t been constructed with international relevance in mind to compete with other countries. Supports are, by and large, not in place for international students to deal with all the troubles that come with learning in a new country. We’re not doing things as basic as helping international students adjust to the local diet. Sounds simple, perhaps prissy, but when you’re thinking of dropping big money on a foreign education it’s the little things that matter.

Similarly the report points out, Irish education institutions are not capitalising on their massive commercial potential. These institutions house scientists, creative people, budding business people and more. They are hotbeds of innovation that we rely upon to drive our economy. There is more to be done to both nurture and grow this talent and for universities to get a slice of the pie from so supporting them.

A thread that runs through most of the report is a lack of consistent commercial urgency in the leadership throughout the sector. With money simply coming in from government in the past, nobody had to think much for themselves to survive and so you got academics with commercial acumen by process of luck more than design.

There needs to be a better balance, with leaders who set targets and cut through the bureaucracy to achieve results. Inertia is not an option when the government is swiping hundreds of millions off the table.

Fairer ways of funding education

Government grants are also a by-product of the electoral sop in the 1990s to provide free fees to all students. Many reports since have pointed out that the massive addition to government spending mostly put money back into pockets that could already afford to pay off loans for education, and it didn’t really help anyone new access education who couldn’t before.

Switching to a US style system of hobbling students with massive debts right at the beginning of their independent lives is not something we should do, but there are fair ways to move the onus for paying for education back to those who benefit most from it.

A deferred loan system, backed by government, would be a fair solution that would not remove government from the funding loop, but would make it the underwriter of a stable system rather than the cheque writer.

Deferred loans are linked to income. When a student becomes a worker, they pay a percentage of their income over a certain amount back against the loan for the full fees. If their income falls, so does the amount they’ve to repay each month. If they stop working, they stop paying until they’re back on their feet. If the loan isn’t paid off after a certain number of years, the balance is written off.

This reduces the funding requirement on the government to covering the losses of those who cannot find work, which is just another form of social protection. Meanwhile all those who will, statistically, find it easier to find a better paying job for having a higher education will provide most of the funding for the institutions. Thus, funding will be linked directly to the number of students enrolled more than what the Department of Finance needs to keep ministers in their jobs at the next election.

Selling education bonds?

Now would be an appropriate time to look at funding such a system, when the international markets are offering Ireland loans at record low interest rates. The government could sell education bonds, allow students to pay off the majority of it and cover the losses at much reduced cost to the €700 million a year it pours in in grants.

For our education sector to thrive, it needs to get commercial sense and remove itself from being the victim of government misfortune and political opportunism.

Aaron McKenna is a businessman and a columnist for He is also involved in activism in his local area. You can find out more about him at or follow him on Twitter @aaronmckenna. To read more columns by Aaron click here.

Follow Opinion & Insight on Twitter: @TJ_Opinions

Read:  Graduates are now earning much less. But exactly how much less?

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