Taxing graduates

April 17, 2014

According to Emran Mian, a graduate tax would solve none of the problems the current system of student loans faces (“A terrible policy at a terrible time”, Opinion, www.timeshighereducation.co.uk,  March).

In his argument, he repeats many of the pieces of misinformation about a graduate tax that characterised the 2010 Browne Report, of which Mian was the lead author.

Mian says a graduate tax would be worse for students because it would involve lifelong repayment, require contributions from everyone earning above the income tax threshold and impose no upper limit on contributions.

But the National Union of Students’ proposals for a graduate tax, which were submitted to the review, contained no such features. The proposed proportion of earnings sought in contributions would be variable and progressive, ranging from 0.3 per cent for the lowest quintile in the graduate workforce to 2.5 per cent for the top quintile.

Moreover, a payment time limit of 20 years would ensure that people do not contribute for their whole working lives, and have time to plan to reduce their level of work or take early retirement.

Mian makes the strange point that a graduate tax with limits on the total amount due and the period over which it is repaid is “something more like repaying a loan”. But graduates have to repay a loan at the same rate, provided they are earning above the £21,000 threshold, regardless of how much they earn. I’m not saying that a graduate tax is perfect. But what is certain is that the rise in the cap on tuition fees has proven irresponsible and reckless.

Under the current resource accounting and budgeting charge estimate of 45 per cent, taxpayers will be left to fund a £6.6 billion shortfall from the £14.6 billion per year paid out by the government in student loans. That means that for every £1 invested on teaching and learning in the higher education sector, £7.50 will be spent on cancelling students’ debts. There has to be a better way.

Tommy Gilchrist
Education officer for Reading University Students’ Union, 2009-11

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