The Union of Students in Ireland (USI) has rejected claims student loans are an effective way to fund Irish third level education.

A technical group is preparing to brief the Oireachtas on how a loan scheme would work in Ireland.

But student leaders say such a scheme would be expensive to set up, spur on a new emigration 'brain drain' and would disproportionately punish public-sector employees and workers outside the highest earning professions.

Speaking in advance of the presentation to the Oireachtas, the president of USI Annie Hoey said: "Less than a month after the Larkin Report which pointed out the long-term economic and short-term financial shortfalls of an income-contingent loan scheme, the Government is trying again to obscure the facts and create the impression that the only viable funding mechanism for Higher Education is a loan scheme.

"The Cassells Report showed that properly tax-funded higher education is a viable option, whereas a €10bn loan scheme favoured by Government right now is an attempt to borrow now and move the mess of repayment down the track."

An Expert Group on Future Funding for Higher Education was established by in 2014 'to identify and consider issues related to the long term sustainable funding of higher education in Ireland and to identify funding options for the future'.

'Out of touch with reality'

The Cassells Report recommended three funding options - one of which was the abolition of the existing upfront fees for both undergraduates and postgraduates, and their replacement with a system of income contingent loans provided by the State.

Higher education would be free at the point of entry for all students, while repayment of loans would only commence once a graduate's earnings reach a threshold level and would be set at a defined percentage of annual income, collected through the Revenue system.

It is understood that the Oireachtas presentation will propose repayment terms up to €160 per month until the age of 33.

This is a target the USI claims is "simply out of touch with the reality of graduate salaries".

"With the average salary in Ireland around €46,000, graduate salaries in Ireland are around €28,000, and significantly lower in Dublin", Ms Hoey said.

"A loan scheme is likely to spur an increase in emigration from the country to avoid debt repayment – with significant economic, skills and social consequences".

Solidarity TD Mick Barry said the proposal amounted to a return of full fees 'through the back door'.

"The introduction of any student loans scheme amounts to the re-introduction of fees. It would be a regressive step which would effectively remove education as a right open to all.

"Over the last number of years we have seen huge increases in fees through almost yearly increases in the registration charge. The loan scheme would be full fees being re-introduced through the back-door."