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Students hit by new stealth tax under radical coalition plans
Tim Ross, Education Correspondent15 Jul 2010
Millions of university students will be hit with a new “stealth tax” to pay for their degrees under radical plans announced today.
Business Secretary Vince Cable warned that students will be forced to pay more for their courses amid deep cuts to university funding.
Brighter students who gain highly paid jobs in medicine, banking and law will be taxed at a higher level than those earning less from their degrees. In his first speech on universities, Mr Cable said the current system of charging undergraduates up to £3,225 a year in tuition fees functioned like a “poll tax”.
“It surely can't be right that a teacher or care worker or research scientist is expected to pay the same graduate contribution as a top commercial lawyer or surgeon or City analyst whose graduate premium is so much bigger,” he said.
The graduate tax plan is intended to take the political sting out of increasing tuition fees — an issue the Liberal Democrats opposed in opposition. But the move puts the party at risk of a major rebellion in a Commons vote. Mr Cable claimed the policy is a move away from the current tuition fee charge.
But critics warned that students and parents would not be conned by his attempts to “rebrand” their debts.
The proposal also comes at a critical time for students. Hundreds of thousands of sixth-formers are set to miss out on university places this summer amid record demand for degrees. And graduates are facing a desperate scramble for jobs as vacancies dry up.
Currently, the Government gives students a loan to cover tuition fees while they study and graduates only begin paying back their loans after they have started earning £15,000 a year.
Mr Cable said: “The reality is we are going to have to develop a model in which the balance of funding for higher education in England combines less public support and more private investment from those who benefit most from it.
“I am interested in looking at the feasibility of changing the system of financing student tuition so that the repayment mechanism is variable graduate contributions tied to earnings.”
Speaking at London South Bank University, he warned vice-chancellors: “Universities are going to have to ask how they can do more for less. There will probably be less public funding per student, quite possibly fewer students coming straight from school to do three-year degrees, greater contributions from graduates (and) more targeted research funding.”
The National Union of Students welcomed the proposal for a graduate tax as a “fairer” approach. But NUS president Aaron Porter said: “Students and their families will not be conned by rebranding exercises or marketing drives.”
Sally Hunt, general secretary of the University and College Union, representing lecturers, added: “The general public will not stomach a rise in university fees.
“If the Government thinks it can get the public to swallow higher fees as some sort of graduate tax, it is living in a dream world.”
This system will penalise success'
Jack Thornborough, who is preparing to study biology at Queen Mary University in London, is very concerned about the proposals.
The 18-year-old from Northolt has just completed A-level biology, chemistry and maths. He said: “This system will penalise success. People will not have an incentive to push themselves on in their careers. They're tying it up in a bow to make it sound good, but this is going to send out the wrong signals to people — it will demotivate them.
“This is all because of Britain's debt,” he said. “The amount of debt is ridiculous and needs tackling — but I don't understand how someone could let this happen in the first place.
“The whole point of a university education is to further the education of students. Now, a child who comes from a poor background and is found to be bright so gets pushed at primary school and gets good grades through secondary school will find it tougher. People who can't afford it won't be able to go.”
If you earn more, you can give back more'
Sahaarn Sidiqui is preparing to study medicine at Queen Mary and would be forced to pay a higher rate of graduate tax under Vince Cable's proposals.
But the 19-year-old, who lives in Ilford and studied at Havering College, believes the reforms outlined today “make sense”.
She studied chemistry, physics, maths and biology at A-level.
She said: “The more you earn, the more you can afford to give back to the government. It's fair, but if you are one of the ones working harder it may not feel like it. But this happens in life anyway, your taxes rise in line with your income.
“We were expecting changes to the university fee system. The ideal would be to bring the price of university education down.
“But if that's not going to happen then I think it is good that they are finding new fair ways of paying that take into consideration that not everybody does as well as each other.”
Reader views (29)
I have met many graduates and Uni students. I can confirm that their education was a total waste of their time and mostly our money. Make them pay for everything.
- Fred, London, 16/07/2010 07:17
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If the Government charges a "Graduate Tax" how are they going to claim it if the student emigrates, as some do?
- Peter, Watford UK, 15/07/2010 23:21
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Nora, taking what you say quite literally to keep this affable, I'm a first, going-on-second, year medical student, so I needn't concern myself with such things at this time; however, if I had to stick my neck out and take a wild (probably reasonably educated) guess, I'd say I could calculate dosages better than yourself.
I'm not sure for what purpose you are commenting here, as you are providing little more than slanderous conjecture with no apparent intent other than to provoke a fight. Perhaps it would not be unreasonable for me to request you act your age as I am managing to do so myself - of course, if you are indeed a child, then please make this known so I can make exceptions for you; heaven forbid it will fall to the youth to set an example.
- Christopher Platt, Cambridge, UK, 15/07/2010 18:01
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I agree that tax should be variable based on earnings - but I don't agree graduate tax should exist. I think the student loan is fair, as like any other loan, we all pay back what we've taken out regardless of earning.
However, other ideas Cable has mentioned are terrifying me - 2 year degrees?! Also if he wants universities to 'give more' he needs to be realistic about the rate of pay we recieve...18k per year is not a lot, given most lecturers have done a minimun of 6 years at university themselves!
- Liz, Stirling, Scotland, 15/07/2010 17:49
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The big problem is young and old people can't seem to get decent jobs, no matter what their skill level, unless they have a piece of paper saying they have a degree, regardless of what it's in. If companies would spend more on their training programmes for school leavers and those who are already in the work place, instead of putting such high emphasis on a degree it would reduce the amount of people going to university and the balance would, in time, be restored.
Obviously for such things as law or medicine people will need high education but for getting administrative jobs, working on the underground or social work to name but a few, surely practical experience and working your way up are more important than sitting in a class for 3 to 4 years being taught?
- S-M Hearmon, London, UK, 15/07/2010 17:47
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Mark, it is nice to read a constructive reply!
I did not realise that this increased tax would replace tuition fees entirely, in fact, this was not explicitly stated in the article so I assumed it was an alternative to increasing existing tuition fees. Presuming you are correct, I would agree with you almost entirely, though it must be kept in mind that the majority of student debt is from maintenance costs, not tuition fees.
I also agree that the duration and level of increased tax is important, but more in the context of what mike said earlier regarding the best candidates simply moving abroad; whilst medical practitioners do earn reasonable sums as it is, reducing this amount can only deter some candidates from staying in the UK or applying at all, some of which will be among the best - do we really want to reduce the quality of medical staff in the UK? Of course, this would only become apparent if the additional tax was on a large scale (which I imagine it is).
- Christopher Platt, Cambridge, UK, 15/07/2010 17:43
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Whatever the merits of this proposal, it is being presented with a remarkable degree of openness if its meant to be a "stealth" tax. I accept that the end result will vary accordnig to income, which presents us with an unknown, but hrdaly stealthy, factor.
- James Elliott, Eastbourne UK, 15/07/2010 17:43
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OK if Daddy has a fat wallet. Not fair on the 'lower class', who have had to work hard for the chance to get a university education.
- John Bandey, St Pardoux, France, 15/07/2010 17:36
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- Mark, London, 15/07/2010 17:04
Spot on Mark.
You nailed his dodgy(Christopher's) accounting.
Christopher, how are you on calculating drug dosages?
- Nora Kane, London, 15/07/2010 17:20
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We should have a tax on babies too
- Bob, London, 15/07/2010 17:08
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Christopher - I'm confused by this:
"More importantly, I think though, is the effect that this will have on access to courses such as law and medicine to those of lower socio-economic status. This will further increase the monetary burden to those less well-off and deter some potential applicants from even considering applying. "
As far as I can tell, instead of paying tuition fees upfront, you pay a higher rate of tax after you have graduated. Therefore, those in 'lower socio-economic groups' would actually benefit as they wouldn't need to come up with the tuition fees during tuition, only after graduating once they have successfully found employement.
The question of how long after your degree you have to keep paying this higher rate of tax, and exactly what this higher rate is, is a much more important consideration.
- Mark, London, 15/07/2010 17:04
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Taxes are like pouring water down a rat hole.
Never enough.
- mike sokoloff, Jackson, NJ USA, 15/07/2010 15:53
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From Charles Baxter, Sutton, Surrey, UK
"Still by the time you leave Medical School, top rate tax will be 50% which you'll hit fairly quickly as you're probably pretentious enough to reckon you'll be a Consultant sooner rather than later."
What a thoroughly pleasant and polite man you are, Charles.
Attempting to address your comment with some civility, the way in which the system works is such that the time to reach each respective consultancy status takes approximately the same time for everybody as far as I know (ignoring exam failure), it is merely a case of being accepted onto the specific speciality in question. For the record, from beginning training to becoming a consultant takes something like 10-15 years, so I will be on a far lower salary for quite some time - basic salary for a junior doctor is only slightly over 20k pa initially; however, this is going slightly off topic - perhaps you could keep personal vendettas to yourself in future to facilitate useful debate.
- Christopher Platt, Cambridge, UK, 15/07/2010 15:26
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Students already repay their loans according to how much they are earning.The worrying bit about this new idea is that students could keep on paying more, even when the cost of their further education is paid for - when that was put to a government minister on the one o'clock news he did not deny it.
Similarly, if universities are allowed to charge more than others, it will lead to a two or three tier system with only the rich going to the best universities.
I think we should all wait until LOrd Brown reports before getting too worried as what has been said today by Cable and others is just kite flying.
- bob, stratford, London, 15/07/2010 15:07
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Do you need a degree to work in McDonalds these days? Seriously though, I went to uni over 12 years ago, and left a year before they brought in tuition fees so I was quite lucky. However my student loans were pi**ed up the wall along with many other peoples. On my course which was business related prob 50% were there for a doss and about 10% eventually dropped out. At least tutition fees makes dossers think twice about going to uni in the first place....I scraped by and am now a self employed Project Manager, incidently I couldnt get my arse out of bed for the Project Management lectures or lessons, ironic isnt it?. Im a firm believer that people should work first and then go to uni, the stuff I was learning didnt make any sense or was of interest at the time.
- DC, Ealing, 15/07/2010 14:58
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What a wonderful pic, Vince cable looks like he is sporting a new type of Mohican!! hahaha
- ishi, London, 15/07/2010 14:53
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Good Lord. Latin O level?! Sounds like we're from the same generation Nora K. I must check you out on Friends Reunited.
Note to the wife: I'm joking dear, you're not getting rid of me that easily.
- Peter M, Abu Dhabi, UAE, 15/07/2010 14:51
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this will just encourage the best qualified graduates to emigrate
- mike f, london, UK, 15/07/2010 14:47
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From Christopher Platt, Cambridge, UK
"Furthermore, without meaning to sound too pretentious, why should I and many others be penalised for being more successful financially?"
You don't sound in the least pretentious - just utterly patronising.
I also think HM Treasury might have a view about why you and others shouldn't be penalised for financial success.
Still by the time you leave Medical School, top rate tax will be 50% which you'll hit fairly quickly as you're probably pretentious enough to reckon you'll be a Consultant sooner rather than later.
- Charles Baxter, Sutton, Surrey, UK, 15/07/2010 14:45
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- Peter M, Abu Dhabi, UAE, 15/07/2010 14:23
Peter,I had a grant to see me through uni.It paid for my books and travel to and fro.
The grant was means tested and given only to poor families.
Mind you, in my day you couldn't get into university unless you had a Latin O level, so I'm going back a bit.
- Nora Kane, London, 15/07/2010 14:44
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Let's get real people, even students graduating with good degrees in good subjects from good universities can't get a full time job on minimum wage.
I suggest we leave those brave enough to take on degrees with debt alone and let the tax system take care of the future.
At present you should do a degree to improve your own knowledge but as for getting a job, forget it.
- Stephen C, London, 15/07/2010 14:42
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I am a medical student, so call me biased if you will, but I think this is ridiculous, despite being in support of a reform in some degree.
Whilst it is true that my salary on graduation will (eventually I might add!) be far greater than those on other courses, I will be leaving with a graduate debt twice that of most others as my course is six years long, not to mention that we will pay more tax overall anyway.
Furthermore, without meaning to sound too pretentious, why should I and many others be penalised for being more successful financially? Taking medicine as an example, we are worked to the bone, with stringent requirements that begin at A-Levels and continue throughout our careers!
More importantly, I think though, is the effect that this will have on access to courses such as law and medicine to those of lower socio-economic status. This will further increase the monetary burden to those less well-off and deter some potential applicants from even considering applying.
Students studying courses that are essentially useless should be penalised, not those who have studied courses allowing them to make a significant functional contribution to society.
- Christopher Platt, Cambridge, UK, 15/07/2010 14:24
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All I can say Nora Kane is that I sat on the No. 15 to Oxford Circus for many years and was quite happy to contribute to the Uni fees of others.
I have to admit to being a bit miffed when it was the turn of my kids to go to Uni and it wasn't free anymore. But, such is life, I suppose.
Fortunately, I could afford it. I feel sorry for the kids that don't have financially stable parents and have the worry of Uni fees hanging over them for many years.
- Peter M, Abu Dhabi, UAE, 15/07/2010 14:23
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RaDNews Education
Education gets hit with the big stick
Once again the elitist are putting progress on the back burner with their new rules to make students pay even more for their education. Investment in education is a must if this country and its population are to grow in ability.
Education should be encouraged and offered free to all UK citizens, for it is an investment in the future potential of the UK.
It is about time the people of the UK got back what they are paying for. It is unrealistic to think that the non caring unyielding governments have the people’s best interest at heart. We need a complete constitution reform, where the people are truly represented and the values of the government/s reflect that of the people.
Full consultation on constitutional change, this means not just consulting with people who agree with you, but also those who don’t
Proposed constitutional change should be rooted in the advantages and disadvantages and not on the political desires of government/s
We can no longer accept or allow less than 5% of the country to lead the other 95%
We need order, honour, fairness and true justice.
- RaDNews, London England UK, 15/07/2010 14:12
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Hopefully it will deter people from studying for Mickey Mouse degrees such as media studies, sociology, politics, etc and see such courses taken off the curriculum.
- R.F. York, Yorks, UK, 15/07/2010 14:12
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Why should the woman on the No. 8 to Oxford Circus pay for someone else's further education?
They should work their way through Uni.
- Nora Kane, London, 15/07/2010 13:58
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2 things:
1 - In what way is this a stealth tax exactly? It's been proposed by the current Government publicly and if brought in, everyone will know about it - no stealth as far as I can see.
2 - Surely those grads that go on to higher paid salaries (lawyers, doctors etc.) already pay more in tax than those who go on to be nurses and carers? Having said that - allowing people to go to uni and come out with £20k of debt seems pretty dumb to me, so maybe anything's better.
- Liberal and proud, London, UK, 15/07/2010 13:54
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Sorry SarahJ, I can't agree with you.
I am certainly not a fan of any kinds of fees for Uni students, BUT, if they have to exist, then it does make some sort of sense that they be variable in line with their future earnings.
Without this differentiation, we would never get anyone studying the support careers. Nurses, teachers (we'll ignore the current headline), etc are very low paid and to be saddled with the same debt as a high flyer earning 3 times as much really doesn't seem fair.
I do, however, agreee with you that there are some students who pick a subject thinking it'll be an easy ride (it probably isn't as easy as they hoped), but it would be unfair to penalise the majority who wish to choose a vocation because of the laziness of a few.
- Peter M, Abu Dhabi, UAE, 15/07/2010 13:50
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I don't quite understand how it is fairer to have those graduates who go on to have high paying careers paying more than those who go on to earn less. I do not understand how it would be fairer to have those graduates who go on to earn a higher wage paying more for their education as those who earn less. Surely it would be fair to have transparency as to how much the course is going to cost before they start studying and allow them to judge whether it is financially viable to continue with their chosen subject.
It may even reduce the number of students studying subjects because they think it will be fun as opposed to choosing subjects that will help their careers.
I wonder how many people would stick with their choice of Media Studies when they have no intention of doing anything remotely media based upon completion of their degree?
- SarahJenkins, London, 15/07/2010 13:29
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