I am grateful to the Chair for giving me the opportunity to raise this important issue. The position is that students do not receive third level grants until November or December each year. This causes great hardship both for them and their families. Will the Minister for Health, who I presume has been briefed on behalf of the Minister for Education, indicate the steps that are being taken to ensure that grants are paid on time, that is, at the beginning of the academic year?
Under the covenant system — and this is an important point — a parent can covenant up to 5 per cent of their income for education purposes. This favours the very rich. Someone on an income of £300,000 or £400,000 a year — there are a few in the Law Library — can easily covenant 5 per cent of his income; 5 per cent of £300,000 is £15,000 whereas 5 per cent of £16,000, which would place a person above the threshold for third level grants, is £800. The rich get richer under the covenant system.
Earlier this week I tabled questions to the Ministers for Education and Finance. The Minister for Finance indicated in reply that the total cost involved under the covenant system in a full year is £37.4 million while the Minister for Education indicated that the total amount paid in fees by students is £45 million. If we were to scrap the covenant system, for an extra £7.6 million per annum we could have free education. This would greatly help those families who are just above the threshold, in particular those families with a second child at third level and in receipt of no assistance.
Middle income families are being clobbered from every side. They are paying for everything and getting nothing. Under the grant system those under the threshold are given grants and under the covenant system the well off are given a major and costly concession. Middle income families who pay property tax, mortgages and income tax and do not qualify for a medical card, do not receive any grants or benefit to any significant degree under the covenant system.
The time has come to phase out covenants. As covenants have a maximum lifespan of seven years, if a decision in principle was taken now they would be phased out over that period. The point I am trying to make is that no new covenants should be granted and third level fees should be phased out. This would provide relief for many middle income and working class families. It is distressing that bright students from middle income and working class families who have the required number of points cannot go to university because their families cannot meet the fees or maintenance costs. Even if the fees were abolished they would still have to meet the maintenance costs and many bright students from working class families would have the chance to go to third level. What is extraordinary is that it would only cost the Exchequer £7.6 million per year. The Government should consider this without further delay.
