Much Ado About Nothing

Posted on August 12, 2010


By Christopher Dingle – Vice President Education, Kingston University Students’ Union

Once again we step into the valley of the shadow of death and we are all threatened by the evil that is the graduate tax. Nurses and Teachers will pay more and the world will fall into darkness. Now that we have the media rubbish out of the way let us examine the realities of the NUS graduate tax plan.

It will be a life sentence, say the papers. Gradautes will pay more! The proposal outlined by NUS would in fact result in graduates in the lower pay range paying on average £500 less and average earnings graduates would pay roughly the same. It is only those who earn above the average who would pay more, as is just.

The money would go the treasury! I completely agree this would be a disaster but there are plenty of alternatives. The legal devices of trusts have been used to protect money for over a thousand years. There is no reason why such a trust device could not be used here to make certain that the money never sees the treasury. A trust controlled by the higher education sector, independent of parliament and the government could funnel the funds straight from the taxman into their control, where it could be distributed free from political influence for the good of the sector.

The difficulty here is working out how the trust would be administered and who the trustees would be. One suggestion is a trust for each university with the board of governors of that institutions as the trustees. Another could be regional trusts with responsbility for the universities in their region. Or perhaps a national unitary trust would be appropriate. There is a clear discussion here that needs to be had.

We do of course already have a form of graduate tax. At current deductions for student loans are made from earnings over £15000 on the PAYE system. It is essential that any new system be of substance and not a simple rebranding. This system would need to see money going straight to where it was needed and would see those who earn more, paying more.

Another claim has been that this system would disrupt short term cash flow. The NUS plan suggests that universities be allowed to issue bonds on future revenue ensuring that the system is soluble and sustainable.

Academic independence and recognition of excellence is essential in a funding system. Research should be properly funded and excellence recognised. But this will NEVER be acheived through a commercial market based system. The average annual tuition fee is the US is currently $26273 without books or living. That would mean an average debt of £50,350 for UK degree, that is over double the current average level of student debt. Increasing fees simply places the burden once again, on students!

So what do we need? The NUS proposal has 5 clear points that are needed for a fair and progressive system that guarantees the future of the sector:

  1. End the market in course of university prices. – A degree should cost the same at Oxford at or at Kingston. There should be no variation in cost.
  2. Ensure that graduates on low pay don’t pay; set a maximum for high earners. There should be a lower threshold of earnings below which no payments are collected, balanced by an overall, single maximum amount that any person can pay in total.
  3. Only charge students a percentage of their earnings for a fixed period. This progressive method means that the system is fair and that students at the poles of the spectrum are treated fairly.
  4. Ringfence the money in a trust. – An independent trust controlled by the sector could determine its own rules for distributing its funds and would allow the sector to look after its own interests.
  5. Issue bonds to solve the issue of short term cash flow.

If the government looks to such a system, not only can we secure the future of graduates, but we can build a system of higher education funding open to all that is fair and progressive and will allow us to secure the future of the sector. No to privatisation, yes to progression!