A Labour minister has just tried to explain on LBC why U.K. society requires young people who attend uni to pay a graduate tax

[EvangelicalAboutButteredToast]

And I’m confused. He was trying to say it was a student loan and then accepted it was a graduate tax and that society deemed that the right thing because they were more likely to out earn those who didn’t attend uni.

I thought that was what income tax was for alongside all the other taxes. Are uni courses subsidised by the government. Is it that?

Scotland can afford it because of the funding it receives from UK government (so mostly from people who live in England).
And it’s only recently that nurses needed a degree. I met a student nurse a few weeks ago whilst visiting a friend in hospital. She was doing a nursing apprenticeship so earning while learning to be a nurse.

Yes @Alexandra2001france and Germany have a high proportion in FE. BUT more of those are practical engineering courses, teaching etc (teaching in Germany is well respected and a long undergraduate course) AND most young people study closer to home

All that is true but its also still free or very little, our friends son, pays around 1000 euro's per year to study in Toulouse, 100km from his home, not that far away but still requires accommodation.

@CraftyNavySeal Scotland affords it for some - but many Scottish dc don’t get places. They are limited due to the funding model. Most dc in the uk who want to go to university, can.

Other countries don’t have the black hole of the NHS. We use our income and borrowing differently, Also France has elite universities that educate elite students. They are not cheap.

Public elite uni's in France are a max of 2500 euros per year...even their private uni's charge a max of 10,000 euros.

The French state spends more on its health system than we do.... approx 260 billion euros, before any individual or business spend...

It matters little if there is £250billion of monies borrowed, if around 50% will never be repaid.
Why not reduce fees/interest rates so that the vast majority is paid back and debt is cleared...

Govt needs to consider whether tax payers money is better spent on removing the 2 child cap or invest in things like FE and HE ..

@Alexandra2001

so if that’s the system we want, we need to build more utility into the system - universities need to be more about the jobs that the country needs and not about what students want to study (obviously, there has to be choice, but the reality is that shortage occupations are where fees should lower first, funded by scrapping poor courses)

I believe there are private universities in France, business schools I think, but the most prestigious institutions are grandes écoles and they are free. If you manage to get in (much harder than oxbridge) you are paid a stipend every month.

universities in France have historically suffered from underfunding and overcrowded classrooms however.

But @matresense and @Alexandra2001 this is back to the fundamental misunderstanding of what universities are and what they are for. Universities are not owned or controlled by the government. The purpose of universities is not to "Educate our Youth".

The primary purpose of the most prestigious universities is the advancement of human knowledge. Although yes it is true that there are some more recently established institutions that focus more on offering courses that are focused on employability skills for young people, that are also called universities, the lack of distinction about primary purpose does the whole country a disservice.

When a university's primary purpose is the advancement of human knowledge, it pursues this by gathering the greatest thinkers to work on expanding the boundaries of that knowledge. The primary purpose of offering undergraduate degrees is to enable potential future professors to learn everything they can about the current state of knowledge in their subject of interest and to gain the skills they will need in order to start the real work of generating new, previously unknown, knowledge (that is the focus of ones PhD, and then all subsequent research work thereafter). Those minds that are well suited to this role are hungry for that knowledge and will absorb it enthusiastically through reading and attending lectures in the richly knowledge-focussed environment of the University. The fact that a large proportion of undergraduate students don't make the grade to become postgraduate students, and eventually postdoctoral researchers and professors, means that universities have a byproduct of reasonably educated young people who aren't going to be working on expanding the boundaries of human knowledge. That is a useful byproduct for many areas of business and enterprise but it's not the university's main aim. This is why most graduate recruitment schemes specify a 2:1 or 2:2 grade (ie expecting the actual "second class" output of the universities) - the people who are the genuine "success stories" of the University process - ie will stay in academia - mostly get a first class grade (some with a 2:1 also manage a decent academic career in the long run).

Universities are independent of government control and set their own policies. Government chooses to give universities funding for research to answer specific important questions in the quest for the advancement of human knowledge, and also provides funding to allow those students with the right kind of potential to become undergraduate students.

If instead we want institutions that are genuinely aiming for job-focussed preparation of young people who aren't destined to be part of the expansion of human knowledge then what we need to do is reverse the conversion of polytechnics into "Universities" and focus on creating reputable and valuable job-focussed qualifications that don't piggyback on the terminology and structures of Universities.

”The fact that a large proportion of undergraduate students don't make the grade to become postgraduate students, and eventually postdoctoral researchers and professors, means that universities have a byproduct of reasonably educated young people who aren't going to be working on expanding the boundaries of human knowledge.”

That is inaccurate information @CactusSwoonedEnding - there are PLENTY making the grade and with the required intellect and interest who decide not to pursue further study for economic reasons. That is they choose to enter the job market in pursuit of greater financial reward than academics.

@Araminta1003 you miss the point. Of course someone with a first class degree can go into the wider job market and they are free to do so. But preparing people for the job market is not why the University offers the course.

@CactusSwoonedEnding - the world is a global place. If the main aim were to “recruit” future academics they would A) do far better being far more selective on entry as they were a hundred years plus ago and B) recruit primarily from top performers overseas.
It is arrogant on the part of universities to think their role is just recruiting future academics. If that were the case, I suggest they go back to the above! And do not take any further public funding.

@CactusSwoonedEnding
Then when universities moan about funding, they are being unreasonable. And when they market themselves as having something to offer the graduates of the future in terms of their employability, they are also being unreasonable and dishonest.

Yes, universities do research. But to be honest, say, doing English at Oxford is not really advancing world knowledge - it’s learning how to think and construct an argument and to understand your subject in depth. But the world could truly cope without lots of postgraduates writing Phds on great literature and becoming professors - the need for it is pretty low. I can’t really see where there is an argument for funding for this publicly, unlike engineering or the sciences. So I guess where your argument (that it’s only about creating academics and some good graduates are only a buy product) goes is that students outside of degrees with a high degree of research utility should pay full whack, take a full risk and be done with it - if that Oxford degree helps in the job market as a by product, great for those students, but there’s no utilitarian need in the state having lots of English professors who just want to train other English professors. And student support should only offer financial support to those students likely to be capable of becoming academics. There’s no good reason to have 50 per cent of the population going to university if only a small minority is capable of being an academic - as a state, you should really consider whether the majority of students would be better served by vocational education than by picking up skills as a potential byproduct of a university education.

If universities really were only for advancing the world, entirely independent of government and self funding, charging market price for their courses, then few would really choose to study certain subjects. But that’s not the world that the government or universities have been marketing to young people. Somehow, it needs to change.

The expansion of universities has produced a by product of second rate academics teaching students that no one employs in large numbers so they just become academics! It’s the definition of a gravy chain. Some courses should be removed and some universities revert to HE provision. The previous system was not broken and we all understood the differences between universities and polytechnics. It made sense. We now have a huge university industry which costs a fortune as wages for new grads are suppressed. We need trained young people, to think critically or as engineers, but we don’t need a surplus of grads who don’t create much in the workplace.

It was also inconceivable in my youth that dc went to to university just to pursue academics and not think about work. I went to a grammar and none of my friends became academics. They simply didn’t see that as a product of their time at university and lots don’t have that aim now but with the huge expansion of universities, many more have been employed.

You can't discuss HE with out thinking about the function of FE, people ought to accessing FE for skills that are related to employment, and HE is for the advancement of human knowledge as @CactusSwoonedEnding has said. The whole system does need looking at again, and we need to be clear on functions of school, FE and HE, and the responsibilities of employers who increasingly want to avoid the costs of training their new staff - and blame everyone else for young people not be ready for the workplace!

Rachel Reeves argument is why should non graduates pay for those who have gone to university?

That would be reasonable if we didn't also have a highly redistributive tax system. But as it is, the subsidy a person recieves for being a low earner dwarfs the cost of tertiary education.

The threshold for being a net contributor (paying more in tax than you recieve in state-funded services (average per person in the UK) is £41k income. The government spends an average of £13k per person every year of their 81 year average life.

Lower earning (below £41k) non-graduates are absolutely not subsidising graduates, ffs. They aren't even covering their own costs: they are being subsidised themselves.

The only group who could be aggrieved are high-earning non-graduates. They pay the high, redistributive tax and didn't get tertiary education paid for. But that was their choice. It's completely consistent with other state-funded services that if you choose not to take it up, you don't get a refund. Not taking up your £120k primary&secondary state education funding - by using private school or home education- is exactly the same.

Student loans are just a way of adding yet another layer of hidden redistribution from the long-suffering, hard-working middle class. There's no moral case for it.

That said, student loan forgiveness would be hugely problematic, given that some people have paid £10s of thousands (life-changing amounts) to pay existing loans off or not take them up (eg by using an inheritance, that they could otherwise have used for a house deposit).

In the situation we're in, the only fair way to make it more reasonable would be to
change all student loans to simultaneously
a) have interest rate of only RPI (ideally calculated retrospectively, and any overpayment refunded)
b) equalise the time before writing off (30 years v 40 year)

@strawberrybubblegum The last time I looked, the loans for tuition went to the universities, so they benefit. They remain open. We also have state borrowing of £250 billion for these loans. Servicing that is paid for by all taxpayers. Companies and individuals. We expanded the university sector (1992 onwards) and then worked out how to pay for it because general taxation could not.

Graduates have always had higher earnings (still do!) so RR argues they should pay. If, at the margins, they don’t, then it’s money wasted all round - apart from fun!

Graduates have always had higher earnings (still do!) so RR argues they should pay

If they have higher earnings due to their degree, then they pay exponentially increasing taxes as a result - and so pay back the degree cost already. With student loans, they're paying twice.

Increasing the University sector was a huge mistake. It doesn't benefit 50% of kids to do academic tertiary education.

Switzerland has only 20-25% of kids going to university, with strong vocational training being a respected and valued path.

UK Student fees were intended to bring market forces to bear on post-school choices. The idea was that people would only take on the cost if the degree was likely to genuinely benefit their career opportunities - naturally limiting participation and driving universities to only offer the most useful degrees. Unfortunately, with the student loan system making the repayment costs seem vague and distant to not-very-mature or economically-savvy 18-year-olds, market forces didn't work.

Amount of tax paid and NI paid at £35k (average income): £6.3k per year
Amount of tax and NI paid at £45k (average 8-11k uplift for being a graduate, 37% by age 30): £9.1k per year

Over a 45 year career, the graduate will have paid >£100k more tax as a result of their higher graduate earnings.

Paying back student loans in addition to progressive taxation means paying it back twice.

@strawberrybubblegum of course it was a mistake! But now it has to be funded. My idea is certainly to remove the bottom tier and revert them to colleges of HE supporting local employers and local dc. They don’t need to offer degrees to CCD A level students. The taxes paid do not pay enough for our university sector and haven’t done for 40 years. We cannot rely on taxation. Unless you want to go back to 15% going to university and 2/3 of unis closing. Not going to happen.

Currently, 80% of applicants holding A-level points equivalent to DDD are accepted to University. That is frankly ridiculous.

As I said, I'd be very happy for university numbers to go back to 20-25%, coupled with much stronger vocational courses making up post-school education for another 30-50%. Like Switzerland - a country known for its educated population, low graduate unemployment and free tertiary education (like most of Europe).

The top quintile (20%) of graduates earn £40,000–£55,000 within a few years of graduating. As I said, £41k is the threshold for being a net contributor - ie paying more tax than is spent pp on average.

So yes, taxes can pay for tertiary education for 20-25% of the population, paid for by them through progressive taxation, in addition to paying their share of society's costs.

It's purely redistribution to take the extra money they're paying in tax and give it to other people instead of using it to pay for the education they recieved which made them able to earn that higher salary (and so pay that extra tax)

Plan 2 was actually supposed to be a progressive system. Low earning graduates pay nothing and are subsidised by higher earning graduates who pay back what they borrowed, plus an additional 3%. Of course it’s unfair that people with rich parents pay no interest, but that’s the case with everything in life, it’s not specific to student loans. No doubt they will also get a house gifted and have no rent or mortgage.

The new plan 5 is actually less progressive, because lower earning graduates are going to end up paying a lot more relative to plan 2, while higher earning graduates will pay less. For plan 5 the repayment threshold kicks in at 25k, which must barely be above minimum wage, and the term will be 40 years instead of 30.

Which system is fairer is debatable.

They are not paying twice. Higher earners pay more tax regardless of whether or not they go to university. I think it’s right and fair that students should pay back what they borrowed. Whether graduates who earn the most should subsidise those who don’t pay off the loans (as in plan 2), is more debatable.

I think it’s right and fair that students should pay back what they borrowed

yes, but not at usurious interest rates

I don't think any of these plans are fair.

I think the fundamental question is how do you see education in society? Do you see it as a commodity or as a social good.

I see it as a social good that ought to be free at point of access - no fees, or graduate loans etc. In my opinion everyone should pay for people to become educated - as society is better with a well educated society. If you want a good doctor why shouldn't you be involved in paying for that doctor to become educated. I accept that not everyone will agree with my view. But I'm against the whole loans system full stop. For what it's worth I went to university in the 90s and never paid fees or had to get a loan - as qualified for a maintenance grant so I very fortunate and I wish more people had the opportunities I had.