Graduate tax to be proposed by coalition government

Business secretary Vince Cable is set to propose a graduate tax in his keynote speech later today about the future funding of higher education, the BBC has reported.

The tax would mean that students’ fees would be paid directly by the government to universities. Graduates would then pay back the course fees, dependent on earnings, over a period of 20-25 years. The tax would replace the current system where students are charged a tuition fee each year. At the moment, the government lends students money to cover the cost of fees, with this loan paid back at a fixed rate when students enter work.

A graduate tax has political benefit for the coalition, as the Liberal Democrats, including Vince Cable, have pledged to oppose raising fees.

In his speech, at London’s South Bank University, Cable is also set to suggest ways of cutting the costs of higher education to both taxpayers and students, including promoting two-year degrees and encouraging more students to live at home.

According to the BBC, another proposal will be for more university courses to be franchised out – with universities accrediting courses that are taught by other institutions. So a degree course might be taught by a small institution close to a student’s home, but the graduate would earn a degree from a more distant, prestigious university.

There will also be calls for a wider role for private providers in higher education, and there have been suggestions private providers will want to expand into subjects such as teacher training and healthcare.

Cable is also expected to retreat from the previous government’s aim of getting 50% of young people into university.

Carl Gilleard, chief executive of the Association of Graduate Recruiters, did not support the idea of a graduate tax.

He said: “There is no guarantee that this tax would find its way into higher education. We believe that the removal of the cap on student tuition fees is the only way to fill the existing funding gap and to compel universities to demonstrate that their degree courses represent value for money.”

But Gilleard added that the scrapping of the 50% participation rate for higher education was “an important step towards driving up standards in our universities and enhancing the value of a degree”.

He said: “The 50% participation target has failed to increase social mobility and has only succeeded in damaging the quality of the student university experience. Every student should have the opportunity to fulfill their potential and to participate in higher education on the basis of academic attainment, ability and determination to succeed. It is essential therefore that the priority for higher education funding is to drive up the quality of teaching and learning, thereby enhancing the student experience.”

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