Friday, 1 October 2010

Moving towards a graduate tax . . . but how far?

I’v been thinking about the Graduate Tax; is it fairer than the student loan process?

Ideally, it would be popular - and a good idea - if we could get rid of the student charging idea - back to the old system where higher education was paid for through general taxation and student grants were available as appropriate. But this was a system for a time when only about 2 per cent of the population went to higher education. If you want to increase that percentage (which has happened) then, the argument goes, the burden on the tax payer is too much. This cannot be a right/wrong answer - it’s a matter of choice or priorities when balancing the UK’s budget.

The next thing to add into the mix is the pressure universities feel on their own bank balances and the need for enough money to manage, effectively, their programmes. They are already making swingeing cuts to staffing and other areas, and must be nearing the level when student experience is affected. There is little doubt that the cap on student fees will be raised or removed in the near future. Universities will feel a great pressure to increase fees, or to vary fees according to courses in order to maximise income. So if a course is popular, the fees are likely to go up.

With variable course fees we are then in a difference set of circumstances. What will be the effect of variable fees on people’s choices relating to economic and social backgrounds? Under the student loan system, students will know what they have to pay back (it will be finite) so the effect of variable fees may be exacerbated. The big advantage of a graduate tax is that the notion of a debt is removed from the student - and that’s a big advantage. But the relationship between the graduate tax element and the student fee is now brought up front; so will the graduate tax be unfair in as much as students on lower cost courses will be subsidising students from higher feed courses?

Or will the graduate tax itself be variable - or capped at the point at which the student fees are paid off? Now this sounds very much like the student loan process, except the loan is not carried by the student but by the country.

The graduate tax is attractive at first view, but I’m yet to be convinced. We await more details.

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