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15 July 2010updated 27 Sep 2015 2:17am

Graduate tax: the devil’s in the detail

A graduate tax can be the fair, progressive and sustainable answer to HE funding. Let’s hope Vince m

By Aaron Porter

While it is correct to say that the jury is still out on whether what Vince Cable means by a graduate tax will be progressive, it is clear to us at the National Union of Students (NUS) that it can, without question, be a very progressive way of funding higher education, and one that has some significant differences from the current tuition fee model.

The principle behind any graduate tax is simple — you should be able to decide to study what you want to study, where you want to study it, without worrying about the different costs involved. You should then be able to choose to work, where you want to work, without worrying about having to pay back debts as quickly as possible. If you are subsequently able to contribute more towards your education, it is fair that you do so, while those that are not able to should not.

Under the present system, almost all students pay back the same “sticker price” (currently £3,225 a year), whereas a graduate tax would tax a percentage of their income. The system thus leaves a graduate who chooses to use their degree to become a careworker or a primary school teacher paying the same as someone who goes on to take a top job in the City.

Indeed, the current model actually leaves those who go in to more poorly paid jobs taking longer than others to repay their debts, thereby accruing interest on their debt over a longer period, and so paying more for earning less. This is fundamentally regressive — as Vince Cable puts it, the current fixed sum acts as a higher education poll tax.

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A graduate tax need not go on indefinitely; many currently suggest a cut-off point of 20-25 years. Similarly, some people argue for the introduction of a maximum total contribution, beyond which contributions could stop.

We must also not forget that this debate is not about the virtues of a graduate tax over the current system of fees, but about a graduate tax as opposed to a move towards a market in fees — a market in which certain universities or university courses would cost considerably more than others. This would be a disaster scenario, driving those most worried about debt away from the elite institutions and presitigious course, and introducing dangerous competition into a sector which is entirely unsuitable for marketisation.

What is most important now is ensuring that, having made some positive sounds, Vince Cable now supports the introduction of a genuinely progressive and fair graduate tax model, rather than this simply being a clever rebranding exercise.

Aaron Porter is the president of the National Union of Students. He studied English literature at the University of Leicester and served as a sabbatical officer at the students’ union.