A graduate tax is not a leftwing alternative to tuition fees

It’s pretty much an open secret that the government is going to try and raise tuition fees sometime soon – universities minister David Willetts hinted as much earlier this week, but even that was hardly a surprise. We can also be pretty sure that any moves in this direction are going to face some strong opposition – the NUS gave up on fighting for free higher education quite a while ago, but Aaron Porter (NUS President-Elect) has made it fairly clear he opposes lifting the cap (currently at £3,225). On this point I wholeheartedly agree – increasing the top rate of tuition fees seems pretty likely to lead to more variation in the fees different universities charge. This will in turn result in more variation in the quality of teaching that different universities are able to offer (since the funds available to them will differ wildly), and in students from poorer backgrounds being put off applying to more expensive prestigious universities because of the cost. When I did Access work with schools as an undergraduate, the Admissions Office staff would always proudly boast to the visiting sixth formers that the fees to study at Cambridge were no higher than at any other English university. If the cap’s lifted, that won’t be true for long.

With all that said, though, when Willetts said that students should see the debt they graduate with as equivalent to a slightly higher rate of income tax (a suggestion which prompted outrage at the NUS and elsewhere)…he kind of had a point. Think about it. Debt from a student loan – as things currently stand – is unlike pretty much any other debt. It doesn’t come with commercial interest rates, you only have to pay it back when you’re earning over £15,000 per year, and the rate at which you pay it back is proportional to how much you’re earning. Payments that are only due if you earn above a set threshold and rise only in proportion to your income? Sounds quite a lot like an income tax to me. I’m happy to acknowledge that there might be a big subjective psychological difference between having a £23,000 debt (the average graduate debt, according to NUS) hanging over your head which you pay back over many years and paying the same amount in extra income tax over the same number of years, but it is a largely subjective psychological difference – that’s precisely the point Willetts was making.

This is not to say that I think students graduating twenty grand in debt is OK – it isn’t. But it is to say that the introduction of a special graduate tax – an alternative to the present system of tuition fees and student loans that’s advocated by many on the centre-left, including the Guardian in this editorial – isn’t really much better. It would be an improvement on the present system inasmuch as higher-earning graduates would pay more overall than their classmates who were on lower incomes, but implicit within it is still the idea that going to university is a privilege – and because it’s a privilege, you the individual graduate should pay more tax for the rest of your life. This is what needs to be challenged. A tax that’s paid by a graduate who earns £17,000 a year as a temp and isn’t paid by degree-less millionaires like Alan Sugar and Richard Branson isn’t a fair tax. It’s true that graduates earn more than non-graduates on average, but that’s small comfort to those at the bottom of the heap. What we need is more progressive, more redistributive income tax, not a levy on letters after your name.