Graduate tax should replace fees, says NUS

The NUS is campaigning to reform the way students pay for their degrees. It accepts that the university sector “badly needs” more funding, but does not think that increasing fees is the way to do it.

NUS President Wes Streeting wants “an alternative way to fund higher education that is fairer for students.” He argues that an increase in the current limit of £3,500 is “arrogant” considering the current economic conditions, and that it would further put off poorer students.

A BBC survey in March showed that two-thirds of vice-chancellors supported an increase in fees, with the majority favouring £5,000 a year, although a quarter said they supported £7,000 or more.

A report by Universities UK predicts that graduate debt would rise on average to £32,000 if top-up fees were increased to £7,000 a year. Rather than doing this, the NUS is proposing a “graduate tax.”

Streeting said that he wanted university to be “free at the point of use, with graduates making a contribution depending on how much they are benefiting financially from their own use of the system.”

Nicolas Barr, professor of public economics at LSE, argues that the NUS’ proposals are misguided.

He says that the current system has the advantages of the proposed tax, in that it is free at the point of entry and deducted gradually from wages. But it also has distinct benefits over the NUS proposals.

Firstly a graduate tax would continue as long as a graduate was in employment, whilst with the current system students know how much they will have to pay, and stop being charged when they have paid it off. Also, a tax would go to the government, rather than to the universities themselves, which would remove their autonomy.

Finally, there is also a practical problem with a tax system; students moving abroad after their degrees would not pay back their costs.

This comes after claims from Conservative MP David Heathcoat-Amory, that 70 per cent of overseas students are “not making their repayments, cannot be contacted or are falling into arrears.”

Barr also points out that poorer students are not being put off by the current system. Although children of professionals are five times more likely to attend university than those of manual workers, 90 per cent of both groups who achieve good A-levels go to university. Thus the problem is not fees, but the education students receive before they choose whether or not to attend university.