Looks like with Vince’s U-turn on the grad tax there is only one inevitable consequence

http://www.libdemvoice.org/vince-why-im-saying-no-to-the-graduate-tax-21535.html#comment-145245

Poor students will be forced to take on more debt to try and get to uni whilst middle class students get mummy and daddy to pay for them

the grad tax is fair and should be supported by Ed M 100%

Students who voted LD last election must feel very very sick by now

Presumably their position on student debt should be the same as their (and Ed Balls’) position on the national debt? All that matters is to keep spending. Deficit schmeficit. Snakebite and blacks all round….

amazing Biffy that the rest of us are told to cut debt but for students it is ok to double it if not more

Well, my student loan is the largest debt I have. But not by much.

I just don’t like the idea of a graduate tax, so I’m quite happy that Cable’s come out against it in the end. Not that any of this is going to affect me personally – it’s not like they can change this kind of thing retrospectively, after all.

“amazing Biffy that the rest of us are told to cut debt but for students it is ok to double it if not more”

Going to university is a choice. You choose to go into debt.

University is wasted on the young anyway. I left school at 16, heard of university aged 25, went to university aged 29, after finishing an apprenticeship and acquiring two nursing qualifications, plus 14 years of post-school life experience. The lecturers didn’t hide their pleasure at teaching someone a bit grown-up, and didn’t the students hate me because I was a swot. If kids got an ordinary job, most wouldn’t be interested in university after a few years, because by then sex and getting pissed would have lost their novelty value.

Trofim, some careers you need a degree, if the cost is too much you put people off from the poorer background is that what you want ?

[deleted]

“Students who voted LD last election must feel very very sick by now”

Tough. In the last two elections they targeted student seats cynically promising measures they knew were wholly unaffordable, safe in the knowledge that they would never be called upon to keep them. Even now they’ll pretend they really wanted to but the big bad tories stopped them. Anyone who fell for it deserves what they get.

well Jimmy that is how it will work and the LD’s will pay an high price

has the Free Education held any meetings and does it have any groups in universities?

“proposing that tuition fees be replaced by an increase in corporation tax.”

Umm, excuse me, but why do you want the average workers of this country to subsidise your degree, the one that’s going to make you hundreds of thousands of extra pounds over your lifetime?

For as we all (should at least) know, corporation tax isn’t paid by corporations. It’s paid largely ( estimates range from 70% of it to over 100% of it) by workers in the form of lower wages.

So why is it that that bloke slaving over a hot griddle in Mickey D’s should be paying for you to nerve have to slave over a hot griddle at Mickey D’s?

‘ To this end, we welcome the UCU’s contribution to the debate, proposing that tuition fees be replaced by an increase in corporation tax. ‘

Wow. Higher corporation tax leads to lower wages for workers. Virtually all economists whether on the left or right if they are being honest know that. One can make the argument that graduates will contribute to the future economy and that is true. However, the degree must lead to a significant personal benefit otherwise students would not do it. Raising corporation tax to finance tuition fees would be asking workers some of whom have very modest wages to finance students receiving a lifetime benefit through themselves receiving lower wages.

Umm, ditto, Tim W.

“So why is it that that bloke slaving over a hot griddle in Mickey D’s should be paying for you to nerve have to slave over a hot griddle at Mickey D’s?”

Because paying your own way is ‘absurd’. I read it in a letter.

The graduate tax was pretty much the perfect solution to this: students can pay their own way, but they don’t end up with a mountain of debt if they never find they benefit from their experience and qualifications. And, importantly, poorer students don’t have to scrape together thousands of pound that most people can just get off their parents before they can access higher education.

That idea’s been scrapped, of course, presumably because spending money now on a fair system that won’t bring in much money till after the next election is a no-no.

Having recently graduated under the system just prior to Labours despicable top-up fees (having about £15000 debt), I have little sympathy for my fellow students demands that university education should be free. Certainly ever rising fees, or the switch to some form of market based system would be disastrous, but free, nope. What my fellow students need to realize is that student debt (with the SLC) isn’t like real debt. You can’t default on your payments. A lack of employment after graduation does not lead to CCJs. It wont stop you getting a mortgage, and they don’t hound you daily for missed payments like a real debt would. You do not even have to start paying it back until you earn about a certain amount (about £18k). Really its nothing more than a time and balance limited form of graduate tax.

@Richard W

“Higher corporation tax leads to lower wages for workers.”

Bollocks, lower corporation tax doesn’t get passed on to the workers. It gets swallowed up by the fat cats at the top who siphon it off into their offshore accounts and use it to lobby for lower corporation tax.

@ 15

Given that you agree uni shouldn’t be free, and are aware of how shockingly reasonable the repayment terms are on student loans, what leads you to describe Labour’s top-up fees as ‘despicable’? I think they were a huge improvement over the previous system (although in the interest of openness I should admit that I missed having to actually pay them by about one year).

@17 – Sorry, i meant “despicable” rather than despicable (think that inverted commas thing people do with their fingers when they don’t agree with the thing they are saying). More haste, less speed typing.

@18

Oh, ok, cool.

“The graduate tax was pretty much the perfect solution to this: students can pay their own way, but they don’t end up with a mountain of debt”

Oh, that’s very good, very good indeed.

In some manner a higher tax rate for the rest of your life is not “a debt” eh?

“In some manner a higher tax rate for the rest of your life is not “a debt” eh?”

Well, that’s semantic. Obviously you could argue so, but on the other hand I don’t think the highest tax bracket is generally thought of as the “being rich debt”.

The idea is to try to balance things so that students overall end up paying off roughly the cost of their education (rather than just some of it, which is unfair on non-graduates) without heavily penalising people who spend three years at uni but still end up paying a low wage. I don’t think that’s unreasonable. I’d happily pay back more than my uni education cost if said education was the only reason I could afford to pay that much back in the first place.

“Obviously you could argue so”

Well, yes, I would, Don’t pay it and you go to jail: sounds pretty much like an efoceable debt to me.

But as I’ve just seen the graduate tax described elsewhere. It’s effectively saying that university fees are now infinite. Imagine (no, just go on, imagine) that the tax is set at 10%.

Then you turn out to be one of those lucky ones who makes £10 million a year in The City. You’re now paying a £million a year for the what, £30,000 (perhaps?) cost of having gone to university?

That’s pretty close to making the cost of university fees infinite, isn’t it?

“That’s pretty close to making the cost of university fees infinite, isn’t it?”

Of course not. Indefinite, maybe. Saying that something adjusted for income is “infinite” is extremely silly, in large part because you end up defining ‘infinite’ as meaning £1m/year for 50-odd years.

If you don’t like the idea of people paying a penny over the amount they cost to be put through the system, what’s your alternative? Shall we keep on letting low earners pay for a system that doesn’t benefit them (and possibly actively harms them)? Or shall we just go back to charging full fees, either upfront or through a conventional loan, thus making sure that the poor don’t get all uppity and try to get well-paying jobs?

On the other hand, if it’s the sheer size of the disparity that offends you, I see no reason why there couldn’t be an ultimate cap on how much people pay back.

“Well, yes, I would, Don’t pay it and you go to jail: sounds pretty much like an efoceable debt to me.”

You really are defining all tax as debt there. Which is fine, but not really a justification for pulling me up just because I’m using the terms more conventionally than you.

“I see no reason why there couldn’t be an ultimate cap on how much people pay back.”

But then it’s a loan, isn’t it, not a tax? Which brings us right back to where we started.

16. Chris

@Richard W

“Higher corporation tax leads to lower wages for workers.”

‘ Bollocks, lower corporation tax doesn’t get passed on to the workers. It gets swallowed up by the fat cats at the top who siphon it off into their offshore accounts and use it to lobby for lower corporation tax. ‘

I think you are confusing I don’t want to believe it with evidence, Chris. Here are some studies from a lefty blog. It is hardly a controversial view but to quote Chris Dillow who often features on here.

‘ I say it merely to emphasise the importance of the idea of tax incidence – that taxes don’t necessarily fall upon the people that they are formally levied upon. An inability to grasp this point is one of the features that distinguishes economists from non-economists. ‘

http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2010/04/corporate-tax-incidence-some-evidence.html

“But then it’s a loan, isn’t it, not a tax? Which brings us right back to where we started.”

I thought loans and taxes were the same thing these days anyway?

I don’t see how it brings us back to where we started, because I believe the starting point was the desire to find the method of funding university that was the fairest possible both to the individuals involved and across society as a whole. That’s where I started, anyway.

Dithering over whether it’s a tax or a loan may be interesting (I think it’s a hybrid of the two), but if it doesn’t change the actual proposal then I don’t see what your problem is. Nor do I see you raising any objections about the proposal rather than the fact that you find it semantically ambiguous, or suggesting a better alternative. Time to get a bit more proactive here, maybe?

OK, proactive then.

Give each university £1 billion pouinds and tell it to bugger off.

Such an endowment would generate, conservatively, £50 million a year. That’s the sort of money they each get nowadays anyway.

They can charge whatever they want to students: they can be free, living off the endowment if they want. They could be like Harvard: anyone who can pass the exams to get in they work something out. High fees for those who can afford them, low fees for those with little, grants for those who can’t afford anything. They could charge the same fee to all comers.

Whatever they want.

Where does the billion come from? Simple, issue more gilts. Doesn’t make any difference at all the the national debt: we all know that government will fund the universities off into the future so the capital amount is already built into everyone’s budget expectations. Whether it’s borrowed now and paid back out of future taxes or whether it’s doled out of those future taxes year by year to hte universities makes no difference.

Proactive enough for you?

“Proactive enough for you?”

I didn’t mean proactively destructive. Imperfect as the graduate taxloan may well be, it’s better than printing hundreds of billions of dollars to give to private interests, while still allowing the poor to be completely dependent on the kindness of rich people’s hearts.

Try again.

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I find the whole “student leaders” thing a bit presumptuous.

As a Lincoln student, I see my “leader” is Jonathan Holmes. He got 0.7% of the entire Lincoln student population’s vote and he ran uncontested.

Not much of a “leader”.

Well at the present time, it is stupid to call it a ‘debt’. You only pay it off if you are earning over 15k, and pay it off a little at a time. I honestly don’t notice my re-payments, they appear on my pay slip but as I don’t have to do anything, and it is a small amount, it really isn’t a burden. (Council tax on the other hand…..) Furthermore if I lost my job and stopped making re-payments, it really isn’t like I’m going to have debt collectors around or lose my house.

I don’t think a Graduate Tax is the right way to go. Neither is the answer to pile up the fees and see students having to borrow tens of thousands of pounds.

Cable’s argument is nonsensical though. We could easily charge full fees to overseas students and a discounted rate for UK citizens.

Ultimately, when it comes to the sciences, we as a nation could make it harder and less attractive to study here, while cutting research grants and encouraging the setting up of schools based around mumbojumbo.

Can’t see that going wrong.

@ 33

“I don’t think a Graduate Tax is the right way to go. Neither is the answer to pile up the fees and see students having to borrow tens of thousands of pounds.”

OK, but that pretty much leaves you with the state bearing the brunt of the costs. Which is a) problematic given the current economic climate and b) unfair on the taxpayers who don’t go to uni, and therefore never benefit from it, but still have to fund it. State-funded tertiary education means the poor paying to help the rich get richer, which is galling.

@Chaise I agree, which is why some sort of tuition fees are sadly the only fair option. If fewer people went to uni to do useless degrees and then end up unemployed, and instead we had more vocational routes into work, then it could be funded by the taxpayer. But even then I don’t see why the taxpayer should shell out for a bunch of kids to have a great time. Go get a part time job, is what I say; cut back. Enter the real world!

A graduate tax in its purest form (I presume Labour back this, they’ve not bothered to elaborate, surprise surprise) is less fair than fees, because it’s unlimited, whereas fees are a fixed amount. Being in debt ain’t great, but people should see it as an investment, and it should make them think harder before they go and do Media Studies.

@31 Shane – according to the letter he’s not your leader, he’s your “Liberation Officer” !

@34

“OK, but that pretty much leaves you with the state bearing the brunt of the costs. Which is a) problematic given the current economic climate and b) unfair on the taxpayers who don’t go to uni, and therefore never benefit from it, but still have to fund it. State-funded tertiary education means the poor paying to help the rich get richer, which is galling.”

a) Such is the mantra from the Coalition. We are now not just sacrificing short term spending, but long term investment in education. Other countries we compete with are not cutting back on education like this, and our economy will pay the price.

b) We all benefit from other people going to uni. You like having doctors, dentists, opticians, vets, architects, teachers, etc don’t you? Exactly. The idea that the only people who benefit are those who go is wrongheaded.

If you don’t like that the ‘poor’ subsidise it, then the answer is simple. Increase taxes at the top end by the amount we need. I think a few % on the top rate should cover it.

A low level of fees, with grants for the poorest and low-interest loans available seems fair – students would contribute some of the cost. Flat fees means that cheap courses are subsidising the expensive ones (and it’s the decent degrees that tend to be expensive).

“We all benefit from other people going to uni.”

No, we don’t.

“You like having doctors, dentists, opticians, vets, architects, teachers, etc don’t you?”

Yup, and those were the groups that when only 10%, 12% of the age cohort went to uni did go to uni.

The big question is whether expanding the percentage of the age cohort from 12% to 50% benefits us all.

For example, do nurses need to go to uni? Accountants, solicitors?

Time was (only a couple of decades ago) that they didn’t. And now they do. Is the world better as a result?

Tim – yes, society as a whole does benefit from having educated members within it. We do all benefit, albeit not necessarily directly.

Your example of nurses is interesting. The job has changed a massive amount from a couple of decades ago, and degree-level nursing was certainly in place when I was at university in the early 90s. Similarly the country and the world were very different when only 10-12% went to university.

Do we need 50%? I don’t know. Perhaps a more intelligent way to do it would be to prioritise subsidies for the most ‘useful’ subjects. Some kind of centrally planned policy to fund what society needs (those mentioned, plus those we need to remain competitive such as engineering and science). Would you go for that?

We do all benefit if we see educated students as adding to the human capital stock. However, the student benefits the most so we need a system of funding where they pay back to society the subsidy that they received from society. It is inequitable that twenty year olds on modest wages should pay tax to subsidise other twenty year olds who will later out earn them.

Richard – there are all kinds of subsidies. I don’t have kids, so my taxes subsidise people who do. I could moan about it, and engage in the divisive politics of envy.

Or, I could accept that children are generally a socially beneficial thing – today’s kids are tomorrow’s adults, and when I’m retired it will be good for there to be people working and keeping the economy going.

20-year olds in employment tend not to be high earners, so are not likely to be providing much in subsidies. However, those who go to university tend to do much better over their lifetime, and so are already contributing more in tax. The subsidy is already coming back. If you don’t feel it’s enough, a more simple means would be to tax people on higher incomes a bit more. They tend to be university educated, after all.