BANK OF Ireland has agreed a deal with Dublin City University to offer heavily discounted loans to cover college registration fees in an escalation of its targeting of the student loans market.
The loans for the annual €2,250 registration fee will be available to the parents of DCU students from this autumn at a variable interest rate of 5.1 per cent.
A further 15 institutions have agreed to sign up to the loan scheme, with details to be announced within days.
The rate of 5.1 per cent applies for the duration of the student’s course. Once he or she has graduated, a higher variable rate, which currently stands at 9.7 per cent, will apply to the remainder of the loan. Repayments are to be set at €100 per month.
DCU is the third third-level institution in the State to agree a deal with the bank. It comes after Trinity College Dublin and Mary Immaculate College in Limerick rolled out similar arrangements with Bank of Ireland earlier this month.
The Irish Times has learned that the next institution that will confirm it is to take part in the discount student loan arrangement is Dublin Institute of Technology (DIT).
An announcement is expected next week.
Bank of Ireland is also in “advanced discussions” with 10 more third-level institutions.
The loan covers the full cost of four years of undergraduate student contribution charges, which currently amount to €9,000.
The interest rate of 5.1 per cent represents a significant discount on normal rates, with loans of up to €5,000 currently subject to an interest rate of 14.02 per cent.
Under the scheme, the full amount of the loan covering the duration of the course is approved up front but the payments are made annually and directly to the third-level institution involved.
In order to qualify for the loan, parents must meet the standard lending criteria, the bank said.
A bank source said they did not anticipate many parents would be turned down for the loans.
Students are not eligible to apply for the loans themselves, although the debt is transferred to them as soon as they graduate.
Announcing the DCU scheme, the university’s director of finance Ciarán McGivern said the payment of the increasing student contribution presented “a significant challenge for many students and their families”.
He expressed the hope that the new offer would “help to make the financial burden more affordable by spreading the payment over an extended period of time, with more manageable repayment amounts and reduced interest rates”.
DCU student union president Paul Doherty also welcomed the initiative.
“Any support offered to students in relation to this scheme will be of great assistance and I hope it will help ease the financial strain on many students and their families,” he said.
While there is no official student loan system in place in the Republic, the Higher Education Authority is at present framing proposals on funding for the Department of Education and is expected to publish a report by late summer.
The report is likely to consider options including student loans, a graduate tax and a return to fees of at least €5,000 per annum.
THE NUMBERS: BORROWING FOR COLLEGE FEES
Annual student registration fee €2,250
Cost of four-year degree €9,000
Rate of interest on loan for student fees while in college 5.1%
Rate of interest on same loan on graduation 9.7%
Rate of interest for normal loan 14.02%
