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Dr Alistair Brown | Associate lecturer in English Literature; researching video games and literature

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Through exploring the psychopathology of Capgras syndrome, in which a patient mistakes a loved one for an imposter, The Echo Maker offers a sustained meditation on the ways in which we project our own problems onto other people. As a reflection on the mysteries of consciousness, the novel offers some interesting if not especially new insights into the fuzzy boundaries between scientific and literary interpretations of the mind. Read more

The Graduate Tax

Tuesday, July 20, 2010

I'm picking up on this potential policy shift quite late, as I have been away at the Latitude festival over the weekend (more on this in the next blog post). However, based on my arguments on this blog and in my tuition fees and contact hours calculator, it should not come as a surprise to learn that I am a supporter of Vince Cable's proposal retrospectively to tax university graduates, rather than requiring them to pay for their tuition fees up front via student loans.

Aside from the question of whether tuition fees and graduate loans deter working-class students from university, there are two inequalities built into the current model whereby student loans are repaid whilst working. The first is that, in effect, the student loan has an interest rate applied to it. Although the interest rate is linked to the inflation rate, and therefore is supposed not to represent a real-terms increase, in practice salaries do not automatically increase with inflation, which means that lower earners will find it difficult to pay off the capital on the loan, instead merely paying off the annual interest. Connected with this problem, the student loan does not discriminate between those on larger incomes who work for the private sector, and those who opt to work for generally lower salaries in the public or charity sector. Because of the inflation interest rate, those who take their publicly-subsidised education into public sector work may well pay disproportionately more for their tuition than those who use their education for their own or private financial interest.

This is something that is not recognised by the old mantra that graduates earn on average £100 000 more over a lifetime than non-graduates, which seems at first glance to justify blanket payback for public education. The flaw here is in the focus on averages. Average salaries in the UK are around £24 000, and it might be reasonable to assume that graduates will be more likely to earn at or above this average than non-graduates. However, the median income is only around £20 000. About two thirds of people in the UK earn less than the average income. A comparatively few high-earners skew the figures; since graduates will comprise a significant proportion of those mega-earners, the idea that the average graduate earns £100 000 more than a non-graduate is probably also flawed. As more and more people attend university, the average graduate is not the city banker, but the moderately paid teacher, journalist, accountant, sales rep, engineer. These are more akin to the average school leaver who works their way up the career ladder.

However, the student loans model does not take into account what actual earnings are, because it is predicated on the assumption that all graduates will earn more than the average non-graduate. This is where a model of repayment linked to actual incomes is inherently fairer. I have no problem with the notion that graduates should pay some additional contributions towards their university education. Although in an ideal world the government would have a holistic vision about the benefits of greater education for all, and hence would provide universal and free university education, I recognise that especially in the current economic climate, such a vision is utopian and untenable. I can also see that tuition fees have successfully funded the expansion of higher education, although I retain many qualms about whether they deter the type of lower-class student who should be the very first in the queue for the education that will enable social mobility.

Where I do have a problem, though, is in disproportionately penalising those who work in public vocations on lower salaries. As Cable has argued, the graduate tax should help to reduce this unfairness: "if you're a school teacher or a youth worker you pay the same amount as if you were a surgeon or a highly-paid commercial lawyer. I think most people would think that's unfair."

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Posted by Alistair at 8:46 am


Anonymous shorter college georgia said...

Thank you for sharing this information. The increase in expense on the part of the student will become a problem. But I still believe that its worth the expense.

2:08 am  

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