A new student contribution charge of €2,000 will be introduced in higher education with effect from the 2011/2012 academic year. This charge will replace the existing Student Services Charge and will apply to all students who currently benefit under the ‘free fees' scheme. The contribution will be paid by the Exchequer in respect of students who qualify under the third level grant schemes. These students, who account for some 43% of all undergraduates, will not be impacted by any increase in charges.
The Government was particularly conscious of the financial pressures that this charge may place on families where family income is marginally in excess of current eligibility levels for maintenance grant support and on families with more than one sibling in higher education at the same time. In this regard it was indicated that the current higher education grants schemes threshold will be increased to provide for an additional eligibility category of support qualifying for ‘50% student contribution'. It was also indicated that it was intended to make arrangements to provide that second and subsequent siblings from a single family will not have to bear the full increased cost of the new €2,000 charge and that further details of these arrangements would be brought forward. The Finance Bill 2011, published on 21 January, now provides for these arrangements. It provides for certain changes in relation to tax relief arrangements for students fees and charges which will give an effective cost reduction in respect of second and subsequent siblings from a single family who are liable for the new student contribution charge.
The current Student Services Charge in higher education does not qualify for tax relief. The existing tax relief for third level fees/charges will now be amended to provide that the first €2,000 in fees/charges per claim will be ineligible for tax relief for students in full-time education. For students in part-time education, the first €1,000 in fees/charges will be ineligible. Families with two or more children liable for the new student contribution will therefore now qualify for tax relief in respect of payments arising from second and subsequent sibling liability. This will result in a reduction in the overall effective cost of the charge in these cases.
Based on current rates of relief, the effective cost of the student contribution charge, net of tax relief, for second and subsequent siblings will be €1,600 each. These arrangements provide a practical means of giving effect to the commitment made that the full increased cost of the new charge will be alleviated for second and subsequent siblings within a single family.