Arsene Wenger complained about the system prior to last weekend's game at Goodison Park and says he would prefer feeder clubs to be considered as an alternative.
Journalist Martin Samuel then called Everton's progress this season a sham because they were exploiting an anomaly that has come about from Financial Fair Play Regulations.
Speaking at his weekly press conference ahead of Saturday's game at Sunderland the Spaniard argued that Everton should be applauded for giving young players a chance - both those on-loan and from the club's academy.
"The loan system is something that has to be part of the game. Young players need an opportunity to develop, but it is difficult to find a loan relationship that works.
"People will go against it, it has its pros and cons. From our point of view the loan system is vital but to criticise it is ridiculous. It would be like criticising us for giving youngsters opportunities.
"Sometimes young players get attracted to the glamour of a young club but you need to be realistic.
"It can be very, very difficult for a young player to have an opportunity in the first team.
"You could find many examples of players who have been treated unfairly just because they are not part of the long term future of the club."
What are your thoughts on the loan system? Are Everton's achievements this season discredited by loan signings? What impact will the debate have should Everton want to sign a player on loan next season?
Have your say below.