Student Protest

[charliecharlie]

New threshold is ?21,000

Old threshold was ?15,000

the difference between the two is only in line with inflation

there is nothing "progressive" about the scheme

I have bright students who (after taking one week off between end of studies and starting work) are now in their 30's, have never been out of work and are still paying off their loans.

For example, I was discussing the issue with one of our Alumni on Thursday (who is 32), her interest is still ?1,000 a year and she feels that she was sold the whole loan idea on the basis that "you will never get such a great deal again, the interest rates are so low" etc and now she feels it was somewhat mis-represented. She is a Senior member of the design team for one of our major retailers, has been working consistently hard since she left college. She is still saddled with debts (think she pays 9% of her salary each year towards her loan repayments) and her fees were only ?2250 pa.

Try to imagine what it would feel like to have 4 times that amount (?27000 as opposed to ?6750) round you neck!!!! when you are only 21.

I am very pro the graduate tax scheme where graduates pay an addition % tax on earnings (the more you earn the more you pay, just like any other tax) with a maximum pay back figure. That way you pay for your education but you are not saddled with debts or tied to the bloody BANKS!!!

http://www.bbc.co.uk/news/uk-politics-11946585

http://www.telegraph.co.uk/finance/personalfinance/8194206/How-much-will-you-pay-for-a-university-education.html

[zeban]

YES CharlieCharlie I completely agree with you. I feel exactly the same as your friend. I was also given the spiel of amazing deal. At 18 I didn't even understand the concept of interest and neither did my friends. I didn't have to pay fees but I had to take out the maximum loan for living costs which was ?12,000. It's now gone up ?5000 in interest since I graduated! Seriously wish I'd known this beforehand. Given that salaries haven't risen in line with inflation I think it's awful. I'm not sure when I'll be able to pay that back.

[Huguenot]

There are several reasons the graduate tax doesn't work:

The link between the cost of the education and the fee/tax paid is broken. Some graudates will be making vast overpayments for their education that are demonstrably unfair.

The prospect of overpaying for education if they are successful creates a disincentive for talented people to study in the UK - they'll pay less overall if they study overseas. We lose our brightest talents.

It encourages well qualified graduates to leave the country.

It discourages competition and quality from Universities because the fund is centrally administered on a per student basis, not on a quality basis.

It creates problems with EU students who are entitled to be educated in the UK, but couldn't be taxed in the UK.

It requires massive upfront investment by the Government because the system wouldn't be earning revenue at a 'mature' state for 25 years.

Government has never been able to ring fence tax revenues for their original purpose (think National Insurance). If this tax went to Government it's highly likely that it'll get spent on whatever passing fad appeals to the electorate, not on Higher Education.

It provides no benefit to low earners, who wouldn't be paying their loan back on either system.

All in all a Graduate Tax just won't do. People have to stop with the idea that they can take money from wealthy successful people to indulge the whims of others.

[Townleygreen]

Brilliantly explained Huguenot - that is really helpful.

[nashoi]

It encourages well qualified graduates to leave the country.

An often quoted problem and no doubt there is a fair degree of truth in it. One partial solution though would be a Passport Tax, imposed on UK citizens living abroad, but who wish to retain their citizenship. Plenty of caveats of course, which is why it could only be a partial solution. To start with, the EU would have to be out of bounds and it would only apply to those earning above the higher rate tax threshold in the UK. The rate charged would have to be debated, but I reckon about 98% would be fair, what about you Huguenot?

[Marmora Man]

I am very pro the graduate tax scheme where graduates pay an addition % tax on earnings (the more you earn the more you pay, just like any other tax) with a maximum pay back figure. That way you pay for your education but you are not saddled with debts or tied to the bloody BANKS!!!

So instead of being in debt to a bank - for a known sum + interest, for a known period and with an agreed set of criteria that mean nothing is paid until your earnings are at the median UK earnings level (pegged to inflation) and that after 30 years any outstanding debt is written off, you would prefer that all graduates pay an extra unknown % of their entire lifetime earnings to the Government - the first is a contract, the latter is a very bad deal.

[Huguenot]

I don't think it's workable nashoi.

The British government wouldn't have any facility to check overseas earnings. It would have to be self-declared and people would declare themselves under the threshold. So you'd have to make it a fixed payment - which would have to be calculated according to education costs. That's the very system that people are claiming is unfair (I don't think it is).

Either way, it still incentivises the most suuceesful and capable people to move overseas - because it would be cheaper than a graduate tax.

As for the passport tax, that's silly. You can't take people's nationality away from them - particularly over something as trivial as a graduate tax. The UK is a modern progressive democratic state, not East Germany in the 50s.

It's also counter-productive. The diaspora are incredibly important to Britain's economic success by supporting British overseas interests. Introducing laws which disenfranchise them doesn't make sense.

[Dickensman]

There has been students in Sweden paying back debts incurred for higher education for years,

their system seems to work as explained by one ex-student working as a waiter on board a hotel ship I stayed on during the seventies,

so there must be a way for pay as you go education to work. He was working in a menial job because he had debts to clear incurred by his degree.

The trick yet to be learned is how to enable people to pay their debts and live, whilst working in a low paid position.

[Brendan]

???? Wrote:

-------------------------------------------------------

> He's done the David Copperfield one before...

Have I? I really have to pay more attention.

[charliecharlie]

I think the idea is a fixed percentage top-up tax (in addition to the standard tax), with a maximum payback figure...

[quote name=What are the arguments for a graduate tax?

Supporters say graduate tax is progressive' date=' arguing that those who have benefited most from a university education would pay most. They also say this would remove the spectre of graduating with large debts, which could deter those from poorer backgrounds from going into higher education.]

If a graduate tax were to be applied the details of the system would obviously need to be defined...

[quote name=What is graduate tax?

Under this system' date=' graduates would start paying the costs of their university tuition when they start earning, in the form of extra 3p or so on income tax. This would mean that the more you are paid the more you pay back. There is still discussion need to define at what point in their career, or at what total repayment figure, a graduate would stop paying, and whether there should be a minimum salary before the graduate tax is triggered.]

[charliecharlie]

Graduate tax system seems to work pretty well for Sweden, Huguenot....

and in the UK, the current SLC (Student Loan Company) seem to be pretty sharp about keeping tabs on graduates (and payment arrangements) when graduates choose to work overseas?

[Huguenot]

A loan is a loan charliecharlie, a graduate income tax is something else. Your use of Sweden as an example is misplaced - critics of graduate tax would prefer to emulate Sweden.

Yes the SLC can pursue repayment as with any other debt, that's why critics of graduate income tax point out that the SLC approach works, but the graduate tax doesn't.

The SLC doesn't keep tabs on your earnings overseas, you make a voluntary assessment annually. Like any other debt you can be pursued anywhere in the world to repay it, and pay interest when you defer.

There is no proposal in the graduate tax that would limit total repayments. In fact higher earners are expected to continue to pay well after their own fees have been reimbursed, as they are paying the fees for people who didn't generate sufficient income after graduating.

The comparison with the Australia and Swedish models is incorrect. Critics of graduate tax would prefer to emulate the models in these two countries.

Neither of these systems operate graduate taxes, they operate student loans where the repayment is linked to income. However, once the debt is paid, it's paid.

The NUS and other proponents of a graduate tax in the UK say the tax is open-ended, and in fact the system doesn't work unless as many people overpay as there are those whose low income means they cannot pay.

[SeanMacGabhann]

without making a case for either argument (I don't fully agree with all the points made against graduate tax and the governments solution - both have merits as far as they go) but I do wonder if the graduate tax was introduced if we would see the same level of protest

[Huguenot]

I reckon the protesters aren't accountancy and finance undergrads, they'll be in professions unlikely to attract substantial salaries in the future.

They'll see a graduate tax as a transfer of the cost of their three year holiday to the swots that they already hate, and a continuation of their free ride. So much less protest, but actually more unfair.

[tog_in_sox]

My naivete here (althought perhaps still a little more enlightened than most of the undergrads so far interviewed by the media who made my blood boil!) but could someone clarify the effective difference for me please between:

Paying Graduate tax until debt repaid vis-a-vis paying off a Graduate interest bearing loan ?

Figures I've seen in various recent research papers from the likes of LSE are that student's on average out-earn non-grads to the tune of ?100k plus, in the case of the professions and finance of course it's considerably more with dentists and docs some ?200-300 k better off. Asking any student with such prospects to pay ?30k towards this is hardly unfair. To my mind they're just going to be ?30k less richer than the rest of us.

Can anyone find:

GDP figures for the past 20 yrs

Student proportion for the same period

State HE budget for same period

[Huguenot]

A graduate tax is administered through the income tax regime and is remitted to government. The government will then choose to how to expend it. It may not include spending it on higher education, or if it does, may not actually be on the institution that educated you, and will not reflect the quality of the education you received. Most likely it will be a fixed amount per student. No incentive for quality teaching or competitive advancement.

There is no graduate tax currently proposed in the UK that proposes the tax will be ended once the fees are paid off. Current UK proposals suggest an open ended graduate tax that is proportionate to your earnings not to your cost of education. Higher earning grads will pay for the education of grads that don't meet the earning threshold to repay.

Conversely a student loan arrangement lies with an independent financial body, is limited to the cost of your education plus interest, and will be paid directly to the institution that educated you. This is similar to the arrangement in Sweden. In Sweden repayment is linked to your income, this is why people confuse it with a 'tax'. However, it's not a tax, it's a loan.

[Marmora Man]

Adding to Hugenot's post above - the link between payor and provider is the major change, providing much need competition and allowing those that wish to provide quality to do so, secure in the knowledge that the costs will be recovered. There is, and always will be, a different level of teaching between Oxbridge and similar universities and the University of the South Circular - there should be a matching differential in price.

[Huguenot]

I'm not sure at all how many people that are campaigning on either side actually know what they're campaigning for...

It's another great example supporting recommendations against government by referendum or mob rule. Nothing about people being stupid, just that they refuse to inform themselves, revel in ignorance, and leap to judgement even if it's against their own interests.

[Huguenot]

Direct from the Browne Report (cross-party):

[Brendan]

All well and good but where is the capital coming from?

What sort of interest rates are people going to be bound into?

Who is that interest ultimately being paid to and will the profits be taxed?

Most importantly why should a young person trying to make a place for themselves in the mess of a world they are inheriting from you believe you when you say that you can?t provide them with the same free education you were given?

Most of these people know that their protests are a desperate and hopeless last resort as they are screwed regardless of who they vote for. Poring scorn on them because you think you know better is just unfathomably objectionable.

If this has to be done (which is still debateable) it should be done with a shamed apology for the way you have failed the next generation.

I can?t get my head around how someone can be smug, even self-congratulatory about forcing their children (well let?s be honest about it, other people?s children) into debt before they even have jobs.

[Brendan]

?21000 to my mind doesn?t really seem that high does it?

You can earn double that driving a truck. Why bother going to uni?

[Huguenot]

No addditional capital is required under a finance arrangement, the system is expected to increase the number of students in HE whilst not increasing government expenditure. HE insitutions may invest against future earnings if they wish.

Only 20% of students are expect to pay the debt in full, and tutition fees only represent 35% of a university's expenditure - so a substantial amount of the investment in student education still comes from elsewhere. And only a fraction of grads earning over 100k will ever repay their fees in full.

So under the new systems students will still only be paying on average 20% to 30% of the costs of the benefits they reap.

Your point about children being dragged through the muck is hopelessly incorrect. In 1980 only 300,000 students were at University, now nearly 2,000,000 are. That's 1,700,000 who didn't have a chance under the old system.

Nobody is taking anything away from our children.

If you think an additional 1,700,000 children in University is a hopeless failure, then there's not much helping you.

The system has to change. The NUS know that, Labour know that, Lib Dems and Tories know that.

We need to improve education, make it more widely available to a great proportion of our society, and make it more globally competitive. We need to offer more choice to students, and we need to do that at levels of income tax the British people find acceptable and sustainable.

The proposal means that people earning over 60,000 quid a year are still paying less than 300 quid a month. Please, dear Brenda, get this in perspective.

If you think that's smug and self-congratulatory then you're off your head - instead it's balanced, ambitious, and places the burden of cost at the feet of those who most benefit.

[Huguenot]

Specially for Brendad - at 25,000pa you'd have to pay the princely sum of 30 quid a month.

If you think you'd prefer to be a lorry driver instead of a well qualified graduate with long term prospects for the sake of paying 30 quid a month at 25k pa, then that advice is surely yours to offer to young adults when growing up.

I understand your anxiety, but I dont' think they're proportionate. I don't know whether that's because someone hasn't worked hard enough to explain, or because you're just not listening. :(

[SeanMacGabhann]

doesn't include the interest rate of the time tho, so could be quite a bit higher

And if ?70 a month is deemed reasonable for people on 30k a year to pay extra (on top of any existing taxes) can we not just ask people earning that much now to pay that much more tax - should raise a few quid, no?

[Brendan]

The smug, self-congratulatory point is aimed at politicians and holds very true to the way a lot of them have approached this if you?ve been reading the press. Mostly, to my mind, because it wins favour with a certain kind of voter.

Another question though. If your outgoings go up by ?300 are you not going look for an additional ?300 income somewhere? So in a lot of situations isn?t this going to end up just passing the cost on to the consumer or the tax payer?