'Batt O'Keeffe, hear us clear, get your fees out of here!" That was just one of the slogans students blasted out in recent protests against the reintroduction of college fees.

The issue has been contentious since the minister for education, Batt O'Keeffe, first flew the fees kite last September.

On Wednesday, Fine Gael's Brian Hayes published his party's 'Third Way' plan for a new graduate PRSI contribution scheme, whereby graduates would pay a higher PRSI rate when they start work to cover 30% of their education. The following day, O'Keeffe confirmed he will be bringing proposals to cabinet in the next fortnight that will compel students to pay for their college education.

The fees that were abolished in 1995 by Labour education minister Niamh Bhreathnach are coming back in some form, whether it is through deferred loans, graduate taxes or straight fees, or a combination of these. Students who hope to avoid the payment by enrolling this September will not escape as they will have to pay fees from 2010.

O'Keeffe's whispers about fees last autumn have now got the whole country talking and speculation will be rife for the next fortnight. In media reporting to date, the Australian example has often been mentioned and it is believed in some circles that this scheme will be introduced in Ireland, as it has been in many countries across the globe.

Fees were abolished in Australia in 1974 and brought back in 1989 under a new system called the Higher Education Contribution Scheme (HECS), which was developed by Professor Bruce Chapman of the Crawford School of Economics in Canberra.

At the time, the scheme was the first of its kind in the world. The debt is repaid through the income tax system when the student starts working.

Chapman confirmed to the Sunday Tribune this weekend that he met Irish Department of Education officials in England at the end of January to brief them on the Australian HECS.

65% to 70% in favour

"I am not an expert on Ireland, and I would need to be confident about the details of how such a system might operate successfully. There is evidence that the Australian and New Zealand income contingent loans scheme have worked well," he said.

"Very recently a reputable opinion poll reported that around 65%-70% of the population surveyed was in favour, or strongly in favour, of the HECS policy. Those with a HECS debt were slightly more in favour than those without a HECS debt."

He also pointed out the system has not discouraged "poor prospective students" from enrolling in Australian universities.

Under the Australian system, students take out government-sponsored loans which are repaid once they have graduated and start earning a certain annual salary, which was set at Aus$41,595 (€24,549).

According to the Australian Department of Education, the average length of time between a student incurring the debt and starting to pay it back is around five years. The average time for full repayment of debts is seven-and-a-half years.

Because of this lengthy lead-in time before the government starts to receive loan repayments, any new student loan system will not be self-financing until 2017 at the earliest.

Another Australian academic, Professor Sinclair Davidson of the RMIT university in Melbourne, has argued against free education as it does not radically change low socio-economic status (SES) university attendance rates; poor school performance is still the major obstacle to low SES participation in third level.

"Free education assumes that governments can correctly judge how much to invest in the human capital of each student," he pointed out. "They cannot and have not. Indeed, I know of no serious attempt to work out optimal investment in the last few decades."

While there has been much speculation about the Australian model being adopted in some form by the Irish government, a spokesman for O'Keeffe said the minister's report, setting out a detailed range of options, would be presented to cabinet within two weeks.

"That report is still being finalised so it would be inappropriate at this stage to comment on its content, in deference to the whole cabinet. Suffice to say that it will set out a range of recommendations based on best international models and tailored to Irish circumstances," the spokesman said.

But not everyone has confidence in the Australian system, including Diarmuid Hegarty, president of Griffith College Dublin.

'Phobias about loans'

"The person who should bear the cost of third-level education is the beneficiary," he said. "Under a loan scheme they ultimately pay for their education – not the taxpayer, not other people who are not getting an education, not their parents, but the people who benefit."

Hegarty does not believe the Australian system provides the best model for Ireland. He claims it drives young people out of the country and they do not repay the debt through income tax. Instead he urges the government to copy the Norwegian system here.

"Norwegian students get a 75% loan and a 25% grant. If they pass their exams in first year it comes down to a 60% loan and a 40% grant, so 15 % of the first-year fees is a prize for them if they pass their exams. The result is that the students work hard and do not fail their exams, so you get far more productive application of government money as they have an incentive to work. Norwegian parents treat their children as adults and they don't have high dropout levels."

He argued that Ireland needs an attitudinal change and "the Union of Students of Ireland and others need to get rid of their phobias about loans... If people are getting €350,000 loans for apartments, what is another €15,000 for college courses? It is totally unfair that lower middle-income taxpayers have to pay for students of relatively well-off children," he said.

"The government needs to promote the loans scheme and give people from disadvantaged backgrounds the opportunity to repay loans over longer periods. Fifteen thousand euro is a lot of money to somebody from a disadvantaged area, but what is €500 a year over 30 years?"

Speaking on his blog last week, DCU president Professor Ferdinand von Prondzynski welcomed Fine Gael's proposal as "a thoughtful and useful contribution to the current discussion" and praised Brian Hayes. However, he added that his main objection to the PRSI graduate tax is that it can be avoided easily through emigration.

"It would provide an emigration incentive, when what we need is to encourage graduates to stay in the country. I would also have some serious doubt as to whether any such fund would or could be securely ring-fenced for the sector," he said.

Ring-fencing of funding by a government that is cash-strapped in all areas is a key concern in academia. A few months ago, UCD president Hugh Brady, who speaks for the Irish University Association, warned that the seven Irish universities faced a €70m deficit from their stretched budgets and that we were facing a situation where they were giving out "yellow pack degrees".

Protestors recently chanted "No cutbacks, no fees, no Fianna Fáil TDs". O'Keeffe knows that, as college fees are so unpalatable, his next move could be crucial to the party's future electoral hopes.