College graduates could face loan repayments of around €25 euro a week over 15 years as part of major reforms to the third-level funding system.

A Government-commissioned draft report, seen by the Irish Times, recommends the introduction of a new income-dependent loan system, higher maintenance grants for students from low income families and more contributions from the State and employers.

Graduates would begin to pay back tuition fees once their income reaches a minimum level and interest payments would be capped at 'affordable' levels.

The paper explores the possibility of raising the tuition fees to €4,000 per year, though it does not include this in its final recommendations.

The group estimates that the scheme could yield an extra €1bn for the third-level sector, which has been "severely threatened" by funding cuts, increased fees and staffing issues.

The Union of Students in Ireland says introducing student loans to fund third level college is 'unreasonable' and 'ineffective'.

President of the USI, Kevin Donoghue, says student loans are not the right way to raise third level funding.

The proposal has also been criticised by the Anti Austerity Alliance. Paul Murphy TD said in a statement that "the idea of a student loan scheme is effectively the return of full fees through the back door. the cost of third level education will be astronomical, but the bill for it will be delayed.

"The prospect of a mountain of debt which will hang around their necks for 15 years will act as a deterrent to young people from working class and disadvantaged backgrounds from attending college," Deputy Murphy added.