Batt O’Keeffe, the education minister, will recommend the abolition of free college fees in a report to cabinet this week. He will present five funding options to his colleagues, but will recommend an Australian-style deferred-loan system to shift the cost of college education from parents to students.

Ministers are unlikely to take a final decision this week, postponing it until the cabinet meeting in September.

Officials suggest the model favoured by O’Keeffe is a student loan repayable when a graduate reaches a certain income. His proposal is that students would be obliged to repay only a percentage of the cost of their third-level education, not the full amount. The income level at which the repayment will kick in is likely to be higher than in Australia.

A report on the issue, prepared by senior Department of Education officials, presents a number of income thresholds at which repayment of the student loan could kick in. The Australian model, which makes students begin college repayments once their earnings reach about €24,000 a year, has been criticised for discouraging graduates from starting a family, and encouraging others to emigrate.

A government source said there would be “a certain amount of defaulting from whatever plan” was brought in. “This measure is actually a family-friendly road to go,” he said. “People will be surprised to find that is a pretty reasonable measure which takes the onus for repayment off the parent and onto the graduate. We don’t want a yellow-pack higher-education sector. Most countries have a student contribution, or a high-tax regime which funds the education system.”

O’Keeffe said last month that the “student contribution” could be implemented from September 2010, if approved by government, so students starting college this autumn could become liable for the charge from the beginning of their second university year.

The cost to the state of under-writing student fees last year was €357m.

The report given to O’Keeffe examines student funding in a number of countries and then tailors these models to suit Irish circumstances. Deferred-loan systems are used in Australia, New Zealand and Britain.

The reintroduction of fees will face stiff opposition from student unions in Ireland, but could also fall foul of a wider climate of protest as the government grapples with trying to introduce a property tax and a carbon tax, both expected to emerge as recommendations from the Commission on Taxation which will report in early August. The Green party is keen to see new streams of revenue being created for local government, possibly in the form of water charges and a property tax.

Third level college fees were abolished by the Labour education minister Niamh Bhreathnach in 1995. Noel Dempsey, Fianna Fail’s education minister from 2002-2004, examined their reintroduction but faced protests from the Union of Students in Ireland (USI) and internal opposition from Fianna Fail’s government partners, the Progressive Democrats.

The proposal was ultimately withdrawn and Bertie Ahern moved Dempsey to the Department of Communications and Energy in an autumn 2004 reshuffle.

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