Back graduate tax and make pre-fees students pay too, England told

Hepi paper by former Uclan deputy v-c calls for new funding system in which richest graduates pay more

January 21, 2021
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The system of funding English higher education through student loans is “in ruins” and universities should instead be part-funded by graduate contributions requiring the richest to pay more, and potentially levied on those who graduated before fees, according to a report for the Higher Education Policy Institute.

The paper, published on 21 January, was written by former University of Central Lancashire deputy vice-chancellor Alan Roff.

He argues for “a scheme based partly on funding from the public purse and partly from securing a graduate contribution” – suggesting a 50:50 split – with the graduate contribution being “lifelong” and set “at around 6 per cent to 8 per cent of income in excess of an income threshold set at the current median income”. This, he says, would be “more transparent and more effective than the individualised debt and loan repayment approach” used since 2012, when the Conservative-led coalition government slashed direct public funding and shifted funding towards student loans to help achieve its priority of reducing the deficit.

Mr Roff writes that “if Universities UK, the NUS [National Union of Students] and other higher education organisations (including trade unions) were to unite to pursue the graduate contribution option, it would be far easier for politicians to be persuaded this is the way forward”, with the alternative being government moves “in haste” to cut the rapidly escalating public costs of funding higher education under the current loans system.

He also suggests that “it would be possible to consider whether those who were given free tuition fees and maintenance grants to get their degrees could reasonably be expected to pay that graduate contribution”. That, “at a stroke, would enable a far higher percentage of the costs of higher education courses to be met by graduate contributions than could ever feasibly have been collected under the student loan scheme” and “enable the costs to be shared much more fairly on an intergenerational basis”.

More widely, Mr Roff notes that the Office for Budgetary Responsibility has criticised the “fiscal illusion” in the government’s accounting around student loans, and that in 2018 the Office for National Statistics decided to treat the write-offs on student loans as government spending, rather than lending, adding an estimated £12 billion to the deficit that year and unwinding the accounting rules that drove the creation of the 2012 system.

“This leaves the current scheme for financing higher education in ruins,” Mr Roff writes.

The collapse of the old government accounting rules around loans means that attempts to “fix” a model based on “individualised debt” and loan repayments are “doomed to failure”, he argues.

With a shift to a wholly publicly funded system unlikely to gain public or political support, he says, part-funding via a graduate contribution would be the fairest solution, meaning the richest graduates could be charged higher rates and pay more than the cost of their individual higher education, reflecting the greater benefits they accrued.

Mr Roff told Times Higher Education: “I don’t think it will be easy to convince the government to make the changes I’ve proposed, but I don’t think it’s impossible to create a consensual approach to this.”

On the question of pre-fees graduate cohorts being required to make contributions, Mr Roff said he was “not suggesting that any contribution made from people of my generation is backdated to the Seventies, and so I don’t see this as retrospective”. But he continued: “Surely in this Covid-19 era, this is something my generation owes to those who are studying now or in the future.”

john.morgan@timeshighereducation.com

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Reader's comments (2)

The proposal would create an incentive for high earners to move overseas. They might have to cut costs.
Nice idea but too insular. I would recover the money needed for HE from higher taxes on higher earners. I think it is right that the Government funds students to achieve more level 4 and 5 qualifications and fewer level 6 graduate degrees and Post Graduate students. I would have a higher rate of tax of 50% on earnings above £120,000 a year, index linked.

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