NUS Now Favours a Graduate Tax

The National Union of Students (NUS) has long campaigned for a university education completely funded by the state and for a return of the system of grants to cover living expenses, so the announcement of their future funding proposals comes as a bit of a shock.

Wes Streeting, the NUS president, had been under pressure to suggest an alternative to the current system of loans to pay for the fees, which start to be paid back when a graduate passes an earning threshold. He describes the proposals an 'not a simple graduate tax', and he is right - it is not simple.

Instead of a flat rate, the NUS plan has a sliding scale of tax, ranging from 0.3% to 3% depending on earnings. Wes says that this is needed to ensure that those who benefit most from their education pay back most.
There is also a system to encourage companies to pay some of the debt for employees.

I think that he has missed the meaning of 'percent', in that a single flat rate ensures that those earning more pay more. The sliding scale is a nakedly redistributive tax measure. In the NUS's words, though, it is 'progressive'.

The main motivation for the NUS funding suggestions is the pressure from the top research universities to raise the maximum fees charge from 3000 to at least 5000 pounds per year. These universities offer more of the expensive laboratory based courses than the newer institutions and are struggling to fund them. One solution is to recruit even more foreign students, who pay a much larger market rate for their studies, but local students are missing out on places.

Wes Streeting does not want an education market, but with more demand for top courses than places, something has to be done. But why should someone with two Es at A Level, studying an endemanding course at a undistinguished local college pay the same as someone studying Engineering at Cambridge?

A well educated and motivated graduate will benefit from their education, although it is their character and abilities as much as their qualifications that determines their level of career success. With the existing income tax system the Treasure already shares in the success of the best and most employable graduates. If you earn more then you pay more tax.

What is the reason for a punitive graduate tax that seeks to milk those deemed to have a privileged education, who will already be paying a higher rate of tax than others?

Coming from student political hacks, one might suggest it is just the standard class envy of the jealous young socialist. A detail from the NUS proposals that supports this guess is the limit on paying for the cost of your education if you can afford it. Wealthy families who would be happy to completely fund a course will be prevented from paying more than a small percentage, since it is these graduates who will be paying way over the odds for twenty years and funding those on lightweight courses who will never be taxed enough to cover the cost of their education.

It is nice to see the NUS abandoning one of its cherished policies, but this proposal offers more light on the proposers than on future university funding structures.