Graduate tax proposals could jeopardise vulnerable degrees

When I first found out about government plans to replace tuition fees, with a graduate tax based on earnings instead, I was fairly open to the idea. I don’t think that the current system is particularly fair, and as with many areas where political bickering has distracted from the purpose of the system, I am sure there is ample room for improvement.

Sadly however, it’s clear to me that this new suggestion is not very well thought out. I’ll admit that, like many students, I’m a little lacking when it comes to the deep, nitty gritty facts and figures of the treasury. So in doing research for this article, I’ve tried my hardest take in to account the arguments from both sides – but the more I’ve looked into things, the more it becomes obvious that the government haven’t done their homework properly.

On forums everywhere people have found problems and pitfalls, many of which have no obvious answer. For example, how do you define a “graduate”? If your lifelong ambition has always been to train as a vet in Newcastle and on graduation you bugger off to look after sheep in New Zealand, how is the government going to stop you? Are we all going to be trapped, forced to stay in the exotic surrounds of Slough until we’ve paid off every single penny? And who knows when that will be? The government doesn’t seem to have a particular time frame in mind –are these tax proposals for several years, or a lifelong financial burden?

I’m not against the idea in principle, but there are simply too many unanswered questions, and too many suggestions being tossed around at random. The thing that grates on me the most is the suggestion of different “prices” for different degrees. Charging science students much more than those doing other courses, for example, seems ridiculous. Limiting the amount of applicants for subjects such as the Sciences or Medicine will become a huge problem in the future. What our economy needs right now is to generate people who will generate wealth. The new proposals could make this problematic.

Though certain subjects require more equipment and contact hours, the government are vastly underestimating the effect of price on those applying for University, many already bewildered by the prospect of taking on three (or two if the government have their way) years of costs, however they will be paid.

Would you have done the course that you’re doing now, if there was a cheaper option available? Or ask yourself how you’d feel if your degree was one of the “cheap” ones. Would you be so keen to apply knowing that your course cost the same as others you had dismissed as useless?

Some of you are probably shaking your heads now, muttering and getting very Victorian gentleman about the whole thing. You are confident that your degree is the one for you, and nothing that the government can do or say will persuade you otherwise. But, I fear, you are in the minority. While there may be too many courses on offer at the moment, staggering fees will almost certainly cause a polarization of students to a number of subjects, and these which won’t necessarily produce the graduates that progressive society demands.

A recession will always generate new thinking, and perhaps how we view and pay for University at the moment does need looking at. However, these new proposals smack of a group of MPs dying to make their mark in their new positions, at the expense of the education system. Whilst I’m sure many of you can, and will answer the questions above, it doesn’t seem to be something that the government themselves have managed to do at present. Maybe you could give them a hand.

7 comments

  1. The major benefit of changing from tuition fees to a graduate tax as I see it is the removal of the language of fees and debt from the equation. My parents told me that I wouldn’t be able to afford to go to uni. They saw the tuition fees thing, didn’t understand it, and assumed that it’d all cost too much up front. Furthermore, people (often those from underprivileged backgrounds) see that going to uni racks up debt for the future, and it scares them. They don’t understand the benefits that university can afford, and assume that the government would be chasing the debts up after university mafia loan shark style.

    Whether changing from a language of fees and debts to a language of tax will make that much difference is another matter. However, my sense is that it’s richer people that will more scared of higher taxes, whereas the poorer people would be more put off university by fees and debt. This may rebalance the equation towards increased social mobility, but it could as easily not.

    My main problem with it, is that it is, to use the language of the right, a tax on aspiration. The people who earn more will pay more tax than those who earn less, due to this tax, regardless of how much it costs to provide their degrees. I feel that perverse incentives such as these should be avoided as much as possible, and that people should pay for the services they receive, apart from where it benefits society as a whole (for example where there are shortages of graduates of certain subjects, or if there is a lack of social mobility) for it to be otherwise. The current system doesn’t provide these weird incentives, and my sense is that the main reasons that the government are championing this tax and not increased tuition fees are political, rather than the actual merits of the policies.

    Different prices for different degrees isn’t a bad idea in my opinion. However, what is necessary alongside that idea, is that key areas (engineering, maths, medicine, whatever else) are subsidised. They already do this with masters courses and professional qualifications, after all.

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  2. 16 Jul ’10 at 1:12 am

    Stelhan Ariyadasa-Sáez

    To say that the removal of the language of “debt” from the equation is a good thing ignores a major part of the fracas behind this, Ieuan- a great many people object to this on the grounds of the sleight of hand implied in a Liberal Democrat proposing the measure.

    To have Vince Cable turn around and fly in the face of one of the party’s most popular policies of the past decade is rather a blow, to say the least.

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  3. I’d Just like to respond to some of the above.

    Bear in mind this plan is a Labour grassroots/NUS idea so some of the detail is already in place if you know where to look.;)

    “will pay more tax than those who earn less, due to this tax, regardless of how much it costs to provide their degrees. I feel that perverse incentives such as these should be avoided as much as possible”

    why is it a perverse incentive to force the institution to demonstrate the value of their degree in terms of graduate employment. If the institutions students get crap jobs, they pay for it, literally.

    ” For example, how do you define a “graduate”? If your lifelong ambition has always been to train as a vet in Newcastle and on graduation you bugger off to look after sheep in New Zealand, how is the government going to stop you? Are we all going to be trapped, forced to stay in the exotic surrounds of Slough until we’ve paid off every single penny? And who knows when that will be? The government doesn’t seem to have a particular time frame in mind –are these tax proposals for several years, or a lifelong financial burden?”

    To clarify, the solution is simple and within the original NUS/Labour grass roots proposal

    1. A person who has graduated in a BA/BSC or above.

    2. I believe repayment as suggested by the NUS’s original proposal was variable between 0-2.5% over a period of 20 years after graduating and being in a qualifying salary band (£20,000)

    3. At present international treaties protect our student loan repayments with varying degrees of success, the situation would be no different with graduate tax.

    ” You are confident that your degree is the one for you, and nothing that the government can do or say will persuade you otherwise. But, I fear, you are in the minority.”

    Been in the hate my degree boat there are many factors involved, not entirely sure how graduate tax has anything to do with it to be honest.

    “My main problem with it, is that it is, to use the language of the right, a tax on aspiration”

    Wow this really is a student article, because the author hasn’t paid a penny of income tax which does essentially the same thing, takes more money off you, the more you earn.

    Right wing opponents to this plan tend to over complicate what is essentially very simple. This is a neat solution to what would otherwise become a very messy problem. We need to raise funds for our Unis but our treasury is broke. Raising the cap would create a hideous free market in education, this is by far the best compromise.

    I am very much glad that the coalition has departed from the perilous right wing idiocy which was the budget and considered this sensible solution from the grass roots left. I have to give to them on this one, they are listening to us far better than Mandleson ever did.

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  4. To Stel – I care little about the sleight of hand or whatever implicit in the proposals. I care about whether it’s a good policy or not.

    To Nolsy – you say, ‘If the institutions students get crap jobs, they pay for it, literally.’ Imagine two people who go to the same institution to do the same course at the same time. One person goes on to earn loadsa money – the other doesn’t. The one who earns ‘loadsa money’ gets taxed more for exactly the same services and privileges. Yes, on the whole, people from institutions who churn out crapper graduates will pay less. That’s not the point. The point is that individuals suffer disproportionately for working harder because of their ‘success’ (and yes, the scare quotes are there because it’s such a loaded term).

    You also say – ‘Wow this really is a student article, because the author hasn’t paid a penny of income tax which does essentially the same thing, takes more money off you, the more you earn’, in response to my quote (not the author’s quote). Firstly, yes I have paid quite a chunk of income tax (although that’s a tad irrelevant, really). Secondly, yes I know that that is how income tax works. However, that does not mean that I think income tax should be higher for graduates. I see no reason for it to be. Get them to repay what it cost to provide them with the degree, unless it benefits society to do otherwise. Obviously, that last calculation is a difficult one, but it’s one already being made for post-grad courses. If you want income tax to be higher, raise it, but don’t make the burden greater for graduates arbitrarily, when there are other, fairer, ways of making them pay.

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  5. 16 Jul ’10 at 4:48 pm

    Alexander Prowse

    If potential tuition fee debt scares off potential students, then a tax on achievement certainly will. These people that do a good degree and challenge themselves to obtain a good job and career will be forced to pay more, whilst obviously eventually paying the higher income tax rate band when they achieve their greater earnings.

    We were worried about the brain drain when we installed the 50% tax rate (which didn’t really happen to be honest), but what happens when there aren’t any brains left because people realise it is not worth them achieving their full potential?

    Long way to go in formulating this policy, I hope the outcome is not as negative as feared.

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  6. 17 Jul ’10 at 1:17 pm

    Rowen Williams

    this is bad news (comparitavely), looked at the core data and this places us at rank 130th :S ARGGH :( hope this doesn’t effect out league table status.

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  7. 21 Jul ’10 at 9:08 pm

    Just graduated...

    Ieuan: “people should pay for the services they receive” spot on there. I’d take it a bit further though. In general, people are selfish. Someone will always dig out a reason why they shouldn’t pay for their education, either fully (which I would like) or in part, usually, ‘Why should doctors, nurses, teachers, other arbitrary public service employee etc, pay for their altruism when their wages will be low’ which of course they extend to every degree being for the good of the nation. I got a degree, I think I should pay for it, not the people, who are unfortunate enough not to be able to go to university or those who chose not to, through their taxes.

    “Charging science students much more than those doing other courses, for example, seems ridiculous” I disagree, I don’t know if being a physics student adds any weight to my opinion. Certain degrees can be subsidised if and when the positions are needed, such as very large pay packets being offered to science teachers, because there is a shortage of them. This will never happen for doctors and someone is bound to say it means only the rich can afford to have such a career, but as a privately educated student, from a (fairly) well off background I know my parents aren’t paying for my degree, so that puts me in the same boat as someone with far less money. We pay for our education personally through debts. If your parents can and choose to pay for your degree, good luck to you, but it shouldn’t be turned into some rich/poor argument. I would have paid more for my physics degree knowing that I’d be more likely to earn more money to pay my personal debt back. My family finances have nothing to do with it.

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