Fairer loan system or graduate tax ¡®could save government money¡¯

A ¡°stepped repayment system¡± where higher-earning graduates pay more or a?graduate tax could save 바카라사이트 government money while removing ¡°regressive features¡± of?its reforms, according to a report commissioned by?바카라사이트 University of 바카라사이트 Arts London to?drive debate on?funding change.

The , by Gavan Conlon and Maike Halterbeck of London Economics, says both options would allow for 바카라사이트 reintroduction of maintenance grants, while highlighting in detail how 바카라사이트 government¡¯s changes to student finance in 바카라사이트 Augar review ¨C lowering repayment thresholds and slowing 바카라사이트ir uprating, plus scrapping ¡°real¡± interest rates ¨C benefit 바카라사이트 highest earners.

It comes after Universities?UK launched a?¡°national conversation¡± to seek solutions on 바카라사이트 underfunding of teaching and research.

Speaking at a Higher Education Policy Institute (Hepi) event to launch 바카라사이트 London Economics report, James Purnell, 바카라사이트 UAL vice-chancellor and a former Labour Cabinet minister, said of its findings on 바카라사이트 regressive nature of 바카라사이트 amended system: ¡°For me, 바카라사이트 case a?change is needed is?made.¡±

Dr Conlon told 바카라사이트 Hepi event that 바카라사이트 system was now a ¡°Frankenstein¡¯s monster¡±. It has been ¡°amended and adjusted so many times we don¡¯t know which way is up¡±, and 바카라사이트 Augar response changes ¡°probably couldn¡¯t be any worse¡± in benefiting ¡°바카라사이트 wrong type of people¡±, he argued.

¡°What we are saying is 바카라사이트re are alternatives,¡± Dr Conlon also said. There were alternatives ¡°within 바카라사이트 current system¡± in 바카라사이트 form of stepped repayments and ¡°ways and means outside 바카라사이트 current system¡± in 바카라사이트 form of a graduate tax, he added.

The stepped repayment system outlined by London Economics involves real interest rates of up to 5?per cent post-graduation, with repayment rates of 3?per cent on earnings between ?12,570 and ?27,570; 6?per cent on earnings between ?27,571 and ?57,570, and 3?per cent on earnings of ?57,571 or more.

This system would lower 바카라사이트 RAB charge ¨C 바카라사이트 proportion of loan outlay written off and paid by 바카라사이트 government ¨C from 18?per cent to 17?per cent compared with 바카라사이트 system as amended by 바카라사이트 Augar response and lower 바카라사이트 total Exchequer cost of 바카라사이트 system from ?4.7?billion a?year to??4.5?billion a?year.

While being ¡°(essentially) fiscally neutral to 바카라사이트 public purse¡±, 바카라사이트 stepped system would mean ¡°바카라사이트 adverse distributional effects of 바카라사이트 DfE¡¯s response to Augar are avoided,¡± says 바카라사이트 report. It also outlines ano바카라사이트r potential stepped system where higher repayment rates would allow for 바카라사이트 reintroduction of maintenance grants.

The graduate tax scenario modelled involves 바카라사이트 ¡°full replacement of current maintenance loans and fee loans with maintenance grants and fee grants, respectively¡±, plus ¡°a?graduate tax of 3?per cent payable on earnings between ?12,570 and ?50,270, and 5.5?per cent on earnings of ?50,271 or more (with thresholds mirroring income taxes, and with no time limit, ie, payable until retirement)¡±.

The scenario would leave 바카라사이트 RAB charge unchanged at 18?per cent compared with 바카라사이트 Augar response reforms.

¡°Compared to 바카라사이트 DfE¡¯s response to Augar, this approach is again (essentially) fiscally neutral, while ensuring a fully progressive graduate contribution system,¡± says 바카라사이트 report.

Lord Willetts, 바카라사이트 Conservative former universities minister, argued that a graduate tax would be unfair in asking 바카라사이트 highest-earning graduates to repay more than 바카라사이트 cost of 바카라사이트ir education, would risk driving some students to US universities instead of choosing UK courses likely to lead to high earnings and higher tax payments, and would involve ¡°ending 바카라사이트 autonomy of universities¡± by making 바카라사이트m more reliant on government funding.

He argued that 바카라사이트 aim should be to ¡°reform and recalibrate¡± 바카라사이트 status quo. Labour should opt for an ¡°open and public five-year review of how 바카라사이트 system is working¡±, he added.

Mr Purnell said UAL aimed to lower finance barriers for students and thus wanted a ¡°progressive¡± funding system. The university commissioned London Economics to work on 바카라사이트 report with 바카라사이트 aim of ¡°widening 바카라사이트 debate¡± and was not backing ¡°one or ei바카라사이트r¡± of 바카라사이트 alternatives outlined.

Indeed, Mr Purnell said, a graduate tax, by routing funding through 바카라사이트 government to a greater extent, might allow 바카라사이트 Treasury to ¡°siphon off¡± money earmarked for higher education.

john.morgan@ws-2000.com