Graduates who attended university for free should start paying towards the cost of their degree, a research paper suggests.
A new study calls for the introduction of a new “all-age graduate tax” which is paid by everyone who has a degree, regardless of when they studied or how much it cost them.
The proposal would help to cut the amount that today’s students pay to go to university and increase funds raised for the public purse, according to the authors.
The study comes at a time when tuition fees, which now stand at up to £9,250 a year, are firmly back in the spotlight, with growing concerns about issues such as value for money and spiralling pay for university bosses.
Researchers at the Centre for Research on Learning and Life Chances (LLAKES) at the UCL Institute of Education set out proposals for a graduate tax, which they suggest are a mid-point between the current fees and loans system and a general election pledge by the Labour Party to scrap tuition fees altogether.
Under the current system, students can get government-backed loans to cover their tuition and living costs, which they begin paying back once they are earning over £21,000. Any money not paid back after 30 years is written off.
A new study calls for the introduction of a new ‘all-age graduate tax’ (David Cheskin/PA)
The new paper proposes two forms of graduate tax. It makes calculations based on the tax being paid by English and EU graduates, working in England, aged 20 to 64, who had their degree subsidised by the government, as well as tax allowances for the 2016/17 financial year.
Under the first scheme, graduates earning at least £25,000 would pay 2.5% of their taxable income less personal allowance, while under the second, graduates would pay 2% of their taxable income in the basic tax rate band, and 3% on anything over this.
There would be a tapered increase up to these percentages starting once graduates were earning over £21,000.
The paper notes that, under the current system, a recent graduate who paid £9,000 a year in tuition fees and is now earning £35,000 would have to pay back around £105 a month.
The study comes at a time when tuition fees are firmly back in the spotlight (Chris Radburn/PA)
Under the two systems proposed by the researchers, the same graduate would pay around half this amount each month. At the same time, the paper says, more money would be generated for the Treasury.
Under the first option, an analysis of official data suggests that £3.58 billion would be produced annually, and under the second, it would be around £3.7 billion. In comparison, it says, figures show that £1.66 billion was obtained through student loan repayments in 2015/16.
Paper author Professor Andy Green said fine details of the scheme would need to be worked out, for example lower rates for graduates who went to university from 1998 to 2005 and paid around £1,000 a year in fees, or those who went from 2006 to 2012 and paid around £3,000 a year. These former students may already have paid back their loans.
The paper says: “It should not be assumed that graduates in older age groups will automatically resist paying such a tax. Many older graduates will take the future interests of their own children and grandchildren into consideration when evaluating the merits of an all-age graduate tax, and others will recognise the social benefits of enhancing equity between different generations.”