Dáil Éireann díospóireacht -
Tuesday, 3 Nov 1992

Vol. 424 No. 8

Adjournment Debate. - Higher Education Grants Scheme.

Mr. J. Higgins

I have said repeatedly in this House it would be difficult to find a more anomaly-ridden scheme than the higher education grants scheme. I have asserted time and again that while increases in the income qualifying thresholds are welcome in themselves they are, in many cases, illusory. When translated into hard reality they mean very little indeed because they are based on gross rather than net incomes and, therefore, the amount of real relief is marginal.

Essentially, income threshold increases constitute a tinkering with the scheme rather than a real root and branch reform. Indeed, in many cases such tinkering with the system can only serve to make it more complex and inequitable. The Minister for Education's revision of the higher education grants scheme this year was welcome in itself but is a classic example of making an already complicated and bad state even worse.

I have a case of a young student, the daughter of a small farmer, who did first law in 1990-91 in University College Dublin. She qualified for a higher education grant last year because the interest-free payments on their capital borrowings was allowed. The family in question have 25 acres. They had the foresight to see that their only hope of survival and making a living was to borrow and intensify, otherwise it would be a case of packing up, getting out and drawing the dole. They borrowed from the bank and invested in five mushroom tunnels. It is hard, backbreaking work, demanding many hours of hand-on management. Most of the profits go towards paying back the bank — the capital repayments and the bank interest.

Last year the student qualified for her grant because the interest repayments were allowable and deductible. This year the guidelines were changed and the interest repayments are disallowed and, therefore, the student has lost her grant. The family are now trying to pay back two loans simultaneously — the loan for the mushroom houses and the other to educate their daughter. The irony of it is that in calculating the grant in question the interest is allowable for income tax purposes and is deductible. Therefore, one arm of the State — the Revenue Commissioners — are operating one set of guide lines and the Department of Education — another arm of the State — are operating a completely restrictive and more punitive guideline. Another irony is that if the family in question had actually applied for the dole this would have been allowable under the heading of expenses necessarily incurred in running the farm for the previous 12 months.

Why the Department of Education should seek to introduce such a discriminatory, anti-farmer change this year is beyond me. It is particularly difficult to understand when it was done under the guise of that much heralded improvements in the higher education grants scheme with the so-called principle of equity being trumpeted as one of the primary guidelines and raisons d'être. What is relevant to a farmer, or to anybody else for that matter, is the actual income that remains after essential input costs are looked after. That is all that really counts at the end of the day. That is why profits which are ploughed back for essential development purposes should be allowable for higher education grant purposes, the same as for income tax or for social welfare purposes. That is why investment for pollution control or interest on borrowings for pollution control control should be allowed. That is the reason wages paid to a family member — which is creating employment — should be allowed, particularly for members of families who are not drawing social welfare benefit.

Agriculture, as the Minister of State knows full well, is going through a rough patch, but it is still one of the cornerstones of the economy and is still one of the high density employers. It is an area which is fundamental to this country and is one which will give employment provided we invest in it. Obviously agriculture can never absorb the outflow of population from the land. It is fair to say that members of agricultural families have the same right to education as everybody else. The Minister should ensure that such farm families get a fair crack of the whip. I ask the Minister of State at the Department of Agriculture, in the absence of the Minister for Agriculture, to carry out a root and branch reform of all third level grants — ESF grants, higher education grants and vocational education committee grants — to try to unravel once and for all, the labyrinth of restrictions and regulations, of thresholds and guidelines which exist. In the interim I ask the Minister to take on board those proposals which were very eloquently put to the Minister by the Irish Farmers' Association approximately ten days ago.

Mr. Browne

(Wexford): I thank Deputy Higgins for raising the issue and I am happy he did so. It affords the Minister for Education an opportunity not only to clarify the position about interest on borrowings for capital purposes when determining reckonable income for the purposes of the higher education grants scheme but also to review the major reform which, to date, he has introduced in this area.

Let me state at the outset that interest on borrowings for capital purposes has never been taken into account as a deduction when determining reckonable income under the higher education grants scheme. The Minister made no change in this regard in this year's scheme. In fact capital expenditure of any nature is not allowed as a deduction in computing reckonable income for grants purposes, and capital cost on pollution control, farm buildings etc. are, accordingly, not allowed for that purpose.

The Minister's main concern with the 1992 higher education grants scheme was to address the very urgent matter of income eligibility limits. He is happy that he has achieved his objective in that regard with an unprecedented increase in the limits, of up to 40 per cent in some instances. Other major income-related improvements which he also introduced in this year's scheme include: an increase of £2,000 in the income eligibility ceiling for each child after the first attending third level education: the assessment of income eligibility by reference to current income and current income limits, rather than as heretofore the income limits of the year of sitting the leaving certificate examination. This removed an anomaly which was seen as being particularly invidious; the exclusion of the social welfare lone parents' allowances from income assessment for grant eligibility and provision for mature students who are not dependent on their parents to be assessed on the basis of their own incomes and, where appropriate, that of their spouses.

He also eliminated another bone of contention by deciding that the 1992 scheme would apply to all first time entrants to approved third level institutions in 1992 regardless of when they sat their leaving certificate and would apply to both existing and new mature students. All these improvements were made not only in the grants scheme administered by local authorities but also in the scholarship scheme and ESF grants scheme administered by the vocational education committees.

The Department have been doing their utmost to ensure that the new schemes are put into operation as effectively and as speedily as possible by the relevant vocational education committees and local authorities and towards that end have been holding seminars, issuing follow-up assistance and clarification, etc.

The Minister wishes to emphasise that State expenditure on student support for fees and maintenance is currently running in excess of £75 million with more than half of all students holding grants or scholarships. He is, of course, conscious that the grants schemes are still far from perfect and that various matters including the matter of determination of reckonable income need to be examined and refined further. These schemes are the subject of ongoing review by his Department and all relevant factors are being taken into consideration in the preparation of the schemes for next year. I agree with Deputy Higgins that the IFA and other farm organisations have made a very strong case for changes. I understand that the scheme is under review at present.