A division has emerged between the country's Institutes of Technology and the universities as to how to address the ongoing funding shortfall for the higher education sector.

The Institutes of Technology have told an Oireachtas committee that the introduction of a "study now pay later" student loan scheme with potentially higher student fees would prove a disincentive for the majority of students in the Institutes of Technology sector and should not be considered.

Unlike the ITs, the country's universities favour such a move.

Representing the IT sector, Ciarán Ó Catháin, head of Athlone Institute of Technology, called for a commitment to providing free undergraduate education to all.

He said free undergraduate education could be provided as far as level seven or ordinary Bachelor degree level, at a cost of €46 million.

Mr Ó Catháin said a more ambitious approach - the provision of free education as far as honours Bachelor degree level - would cost €197m.

Compared to the universities, the Institutes of Technology cater to a much greater number of students from poorer backgrounds.

56% of students attending the Institutes of Technology are in receipt of a State grant.

At the Institute of Technology in Letterkenny and at Limerick IT, that figure is as high as 72% and 70%.

Mr Ó Catháin said the sector was mindful of national objectives of economic development, social cohesion and equality of opportunity.

He said in an era of mass participation in higher education, those who failed to gain access were now the exception rather than the rule.

The introduction of a student loan system would not align with those objectives, he said.

He said that since the private benefit of third-level education accrued the further one progressed, charges beyond undergraduate level might be appropriate.

Professor Vincent Cunnane of Limerick Institute of Technology told the Joint Committee on Education that the institutes were about social change, catering for many students from disadvantaged backgrounds who were the first generation in their families to access higher education.

He said the Institutes of Technology were about releasing that potential and that the biggest benefit of higher education was not personal but social.

Prof Cunnane said that was why the ITs were advocating that study as far as level seven should be free.

The heads of the Institutes of Technology and the universities were addressing the Joint Committee on Education.

The committee is exploring options for the future funding of third level, with a view to making recommendations to Government.

Prof Cunnane said providing access to education for disadvantaged sectors of society was a core activity of the ITs.

He appealed to the committee not to limit, in any way, access to the third-level sector.

The committee heard the ITs were coming to "a crunch stage" in terms of the funding shortfall and that serious investment was needed.

They said the core purpose and viability of their sector was at risk.

Meanwhile, universities have told the committee they "seriously question" why a fund that is heading towards a surplus of more than €270 million is not released to address the crisis in the Higher Education sector.

Addressing the Joint Committee on Education the current president of the Irish Universities Association, Professor Don Barry, said that the National Training Fund was "heavily in surplus".

The latest estimates showed that the surplus would be €272m by the end of 2017.

Professor Barry, who is also President of the University of Limerick, said at a time when wages, employment, and the economy were growing and adding to this surplus, they were seriously questioning why this surplus was not being applied to the crisis in the sector.

The fund was established in 2000 to support training for people for and in employment. It is made up of contributions from employers.

The heads of the country's universities were addressing the committee as part of the committee's deliberations into a report on future funding for the sector.

The committee has been tasked with examining the so-called 'Cassells report', and coming up with recommendations for Government.

The Cassells report found that the sector needs an additional €600m per year by 2021, and an additional €1 billion per year by 2030, to cater for growing numbers going to college.

The sector will see an almost 30% increase in new entrants by 2030.

The committee heard that while student numbers had already risen by 20% in recent years, the unit of funding per student received by the colleges had fallen by 21%.

Professor Phillip Nolan of Maynooth University told the committee that the sector had "run out of road" but had "a ten-tonne truck" behind it.

Speaking about the additional need for significant capital funding, he said that by 2030 the sector would have to accommodate an additional 48,000 students. That, he said, was the equivalent of building UCD and the Dublin Institute of Technology all over again.

The Cassell's report recommends additional funding from three sources; the state, employers, and students.

In relation to the National Training Fund, Professor Barry also called for an increase in employer contributions.

He said an increase of 0.1% in the employer levy would yield a "not insignificant" additional €50m and said that while employers may baulk at an increase, it had to be seen in the context of overall corporate tax and other reliefs and incentives available to business.

The universities also want to see an increase in the student contribution, to be paid in the form of a 'study now pay later' type of scheme.

The Cassells report explored scenarios which would see students leaving college with debts of up to €20,000 for their college fees.

Addressing the committee on behalf of all the universities Professor Barry also questioned the current system whereby the state pays the fees of poor students through a grant scheme.

He said this money would be used to improve maintenance grants instead.

Chair of the committee, Fiona O’Loughlin, said tough decisions would have to be made.

She said building public support for the arguments the universities made was "vitally important".