Clegg backs taxing college graduates

Clegg backs taxing college graduates

United Press International
Aug. 21, 2010

LONDON, Aug. 21 (UPI) -- British Deputy Prime Minister Nick Clegg said taxing highly paid British university graduates will encourage students of modest means to go to college.

In an interview with The Daily Telegraph, the Liberal Democratic leader said another proposal, raising fees for current students, will have the opposite effect.

John Browne, a former head of BP who now sits in the House of Lords, is reviewing university funding. Some Conservatives in the governing coalition and many university officials would like to remove the current cap on tuition.

Clegg said young people from low-income families are concerned about taking on large amounts of debt. He said charging graduates retroactively through a progressive tax on their incomes would be fairer and give students from poorer families an incentive to go on to university.

"The question is whether you can make it work," he said. "You might not be able to."

Clegg said that in recent years the children of the middle class have gone to university at higher rates than those from poor and working class families.

Hopefully they're waiting until after they're out of college before taxing them.

Or have a job.

Yes that is the idea. Basically, at the moment all students (if they cannot fund themselves) take out a student loan every year for their entire three years of their undergraduate degrees. Interest is only in line with inflation. When they leave university, they will not start paying that back until they earn over a certain wage threshold (about £15,400 per year). They must also pay tuition fees, some can have bursaries and grants but most must take out loans for this too.

What this new system proposes is to fund universities through a graduate tax rather than through immediate payment of tuition fees. I think the finer points of how it might work will need to be thrashed out, and I'm sure that if the bill is proposed by the coalition, then we will know soon enough what the plan is.

I guess i can't complain since it's paid for by the people it benefits instead of hammering everybody.

Yes. And I imagine (and hope) that whether you pay it, and the percentage on top of one's income tax, will be based on actual earnings. I was under the old system and I have just started paying back my student loan but not much because I am literally just over the threshold.

I would also have to wonder whether there is a maximum amount to be paid (so that somebody earning a lot of money end up paying say half a million quid for an education that would have cost no more than £30,000 while somebody who never becomes a high earner is still paying graduate tax on their state pension, or whether it will simply stop after a number of years.

So, you think it's a fair way to tax college grads?

Universities have to be funded somehow, and I'm not keen on them relying solely on private funding for obvious reasons, particularly in the hard sciences.

It would certainly be fairer than the pay up front system we have now and I imagine there is a degree of cost saving here too because graduates with an ability to pay later down the line would not be having grants to pay their tuition fees (as I was, as an independent student, my local council paid mine).