Quinn must explain Govt endorsement for penal interest rate loans for students – McConalogue

Fianna Fáil Spokesperson on Education Charlie McConalogue TD has said the Government is failing to ensure fair access to a new loan scheme for post-graduate students and has described the 10.8% interest rate which will be charged to those who do qualify as “punitive.”

Deputy McConalogue said: “I think a lot of people will be extremely surprised to hear that an interest rate of almost 11% is being charged on a student loan scheme.  There are a number of questions that must be answered about the scheme announced by Bank of Ireland and designed in conjunction with the Department of Education.

“Students do not necessarily have a credit history of any great length and through no fault of their own may have been unable to make a payment in the past.  This should not automatically disqualify a student from being approved for this loan scheme.  The scheme will be based solely on the credit history of the student but there’s no clarity about how rigidly that will be applied.

“Why, once again, are the banks being trusted to make the right decisions?  Again we see that the banks will make the final decision on who should get a loan to further their education.  Why did Minister Quinn no insist on a proper appeals mechanism?  We’ve already seen how reluctant banks are to lend to businesses so I can’t see students being too optimistic about their chances.

“The Department of Education asked Bank of Ireland to look at developing a loan scheme for students.  The concept is useful but this was done after the Government had already cut the maintenance payments for new postgraduate students for the new academic year.  The least students deserve is a system that is accessible and affordable.

“For example ‘Income Contingent Loans’ for students in the UK, under a scheme backed by the British Government, were charged an interest rate of 1.5% last year.  If the Government and Bank of Ireland are serious about developing a scheme for student loans they should be much more creative and fair in how it’s designed.

“We need a scheme that is based on fair access for all students.  This interest rate of 10.8%, which is quite frankly extortionate, means even those who do qualify for the loan will carry a huge burden long after their studies and it should be looked at again.  We cannot allow a situation to develop again where only those with money and means can afford the best education in Ireland.”