Vince Cable’s suggestion to replace up-front student tuition fees with a variable graduate tax may already have been squashed – before it’s even been properly discussed.

Last week, the Lib Dem business secretary proposed a system where the sum each graduate paid for their degree would be based on the salary they earned later in life.

Although many people had questions about the fine print, Vince’s plan was widely considered to provide a promising alternative to the current system, with NUS President Aaron Porter declaring:

“Vince Cable’s support for the principle of a graduate tax is to be welcomed as is his recognition that those who earn most after university should contribute more back as and when they do so.

“He is right to ask why, under the current unpopular and regressive top-up fee system, a care worker or teacher is expected to pay as much as a corporate lawyer or banker.

“The fair solution is to abolish tuition fees and ensure that graduate contributions are based on actual earnings in the real world, rather than sticker prices in prospectuses, which are based on guesswork.”

However, the BBC has since reported that a senior Conservative has said Cable’s plans are an ‘unlikely’ option.

Why? Because his new system would break the link between students and their universities (the tax would go to the Treasury).

The Tory source said:

“It is important that the money goes to the institutions. They have to have an incentive for student recruitment or a penalty if the numbers are falling.”

Today, the argument rumbled on. A spokesperson for Cable hit back this morning, insisting:

“All the ideas are being looked at Vince was clear that he wanted it to be looked at. He hadn’t thought of all the variables. This isn’t a refinement.”

Meanwhile, a spokesperson for the Department of Business, Innovation and Skills said:

“Last week Vince Cable outlined his interest in a system of variable graduate contributions that could replace the current system of fees.

“Lord  Browne confirmed that he was looking seriously at this option as part of his wideranging review into university funding and this has not changed.

“The Independent Review of Higher Education Funding and Student finance led by Lord Browne will report in the autumn… We cannot pre-empt its recommendations.”

This sounds like a right muddle to me.

Look, Graduate Fog is not an expert on university funding.

In fact, until now it’s an issue I’ve largely kept my sticky beak out of, since my real interest is in what happens to graduates after you leave university.

(Plus the NUS already does a fantastic job of covering this issue!)

However, now that this debate is straying into post-graduation waters, I have been giving it more serious thought.

I have been mulling over Vince’s suggestions – and here are my thoughts:

– All discussion of new ways to tackle the university funding problem is a good thing. The ‘value’ of a degree is a tricky thing to pin down – but it’s clear to me that the current system is leaving hundreds of thousands of you with huge debt that is unrelated to your ability to pay it back. In my view, all ideas are welcome. If the NUS thinks a graduate tax could be a good idea, that’s good enough for me. Let’s at least have the chance to discuss the idea properly.

– Would this tax affect those who have already graduated? I’m one of the people who has questions about the small print here. Could those of you who don’t manage to make your degree ‘pay’, claim money back? And could graduates who go on to lucrative careers be asked to pay more for your university education, on top of what you’ve already paid? This seems unlikely, but some clarification would be good. The NUS have outlined how they would like to see a graduate tax system work.

– The relationship between your qualification and your salary is far more complex than Vince seems to realise. Okay, so presumably on average graduates with business-related degrees are likely to earn more than arts-related degrees – but the subject you study is only part of the story. There are all sorts of reasons one degree may be more ‘lucrative’ than another. It could be the institution (any Oxbridge degree is likely to ‘earn’ more than a degree in the same subject from a less prestigious uni, I’d have thought?). Or sheer competition for jobs could play a large part. For example, those of you with media qualifications are finding that it’s hard to make your degree ‘pay’ simply because there aren’t enough jobs in this (relatively) small and struggling industry. Could students from the best universities end up propping up those from the less good ones? Could grads who chose less competitive industries end up subsidising those who choose industries where competition is stiffer? Does this really seem like a sensible solution? Or should we look at sending fewer people to university? Or finding a way to better match the number of students studying a subject (like media) with the number of jobs that there are likely to be available in that industry?

– Sometimes career success has little to do with qualifications. Often sheer hard work, determination, persistence, personality and guts play a far larger role in determining who does well and who doesn’t. If I graduated with an OK degree and slogged my guts out to build a career, I think I’d feel resentful at having to pay more for my qualification than someone with the same degree who simply failed to really apply themselves to their career. And what about those who choose not to make their degree pay? What if I toil for years, building my business empire (!) while my classmates marry rich men, settle down and have children? Remind me again why I should pay for their university education? ; )

– Could variable contributions stoke resentment between students of different faculties? Might some students be irritated by the idea that they should ‘carry’ their friends studying less financially valuable subjects? This isn’t just about bankers paying for teachers’ degrees – which seems more clear-cut (?). What about entrepreneurs and doctors – should they have to pay for their friends’ history of art / philosophy degrees, if those qualifications don’t help them find well-paid work? Could we end up with a situation where determined, business-minded students feel angry that they are being asked to subsidise their less money-driven friends’ education? Would they have a point?

Is a graduate tax system open to abuse? What if someone wants to spend three years at uni but doesn’t fancy working that hard – or pursuing a particularly lucrative career afterwards? Or what if they want to study an ‘ivory tower’ subject for the sheer love of learning? Is it possible that hard-working students who are serious about their studies – and their financial future – could be asked to stump up for less serious or hard-working students’ university bills?

– Funding isn’t the only major problem with university. To Graduate Fog, the massive attention given to the question ‘Who should pay for university?’ is misplaced. This is not the first question we should be asking. The first question is “What university is actually for?” I just can’t see how we can work out who should pay for university when we can’t even reach a consensus on who university is really benefiting (or supposed to be benefiting). For example, if employers want universities to be primarily for training people for the workplace (which they do) shouldn’t employers make a sizeable contribution towards student’s education, since they will benefit from it?

– The politicians’ obsession with the future means they’re blind to the present. This is what really gets my goat. Yes, we need to think about the future – but we also urgently need more help for those of you who have already graduated. All the recent stats suggest we have too many grads chasing too few well-paid, graduate jobs. (I know you don’t all agree with me on this, but in my view this is something the politicians should have anticipated – and in failing to do so they have let you down). Instead, the only idea David Willetts, the universities minister, has had is that you should all go off and start your own business (yes, with no experience or funding – brilliant). We also have the shameful problem with unlawful unpaid internships, which the government has so far failed to condemn publicly, which I think is disgraceful.

Of course the matter of university funding needs attention.

(Graduates’ enormous debt is a big part of the reason your situation feels so uncomfortable right now).

But to my mind, ignoring the other crucial issues which are affecting graduates NOW – in favour of lengthy discussions about how to take students’ money in future – gives a clear indication that the Coalition does not understand this issue any better than the previous government.

Or perhaps it’s just that they don’t care?

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What do you think?
Is Vince Cable’s graduate tax a good idea – or do you have concerns about how it would work in practice? Or, now that you’ve got your degree, don’t you care? Do you think the government should be doing more to help those of you who have already paid thousands of pounds for a qualification – and now can’t find a decent-paid job?

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