In an interview with the College Tribune, Minister for Education and Skills, Ruairi Quinn revealed that Bank of Ireland requested that the government does not underwrite or guarantee their graduate loan scheme in what he described as a “commercial decision” on the part of the bank which received a €4.7bn government bailout in 2011.
“They wanted to be able to tell the international markets and the wider market, case if you like, at home that they weren’t dependent on government underwriting to make it a success,” stated Quinn.
He also revealed the banks belief that if there was no guarantee provided by the state, that those who borrowed would be less inclined to default.
The Minister admitted that this perception on the part of the bank was worrying, describing it as a “moral hazard”. “This might say a lot about us all as a country,” said Quinn who sees the scheme as a means to shore up the economic crises within the Irish education system. Bank of Ireland launched their P

ost-Grad loan scheme, which was developed in conjunction with the Department of Education and Skills and the National Treasury Management Agency (NTMA), in August of last year. This move on the part of the banking sector had been to some extent necessitated when the government decided to discontinue maintenance grants for postgraduate students in 2011.
The bank also provide a loan scheme aimed at parents and guardians of third level students to cover the cost of the annual registration fee. The loan is available at a discounted rate with a 9.9% APR while another scheme where students can fund their own registration fees is available at a rate of 11.9% APR.
On the 9th of January the government sold €1bn of bonds used to bailout Bank of Ireland in 2011. The bonds were sold for a sum of €1.01bn, a return of 10% per annum, described by he Minister for Finance, Michael Noonan, as “a generous return” for the Irish taxpayer. The Irish government currently holds 15% of the Bank of Ireland while American investors bought a 35% stake in the bank 18 months ago.

-James Grannell