Business Secretary Vince Cable has announced plans for a graduate tax, which he said could make England’s student funding system ‘fairer and more sustainable’.
This would mean students repaying their tuition costs through taxation, once they started working, with higher earners paying more.
Mr Cable said students would “almost certainly” have to pay more as funding cuts hit the sector.
The business secretary said he would ask the review to examine “the feasibility of variable graduate contributions”.
Students and the university sector are bracing themselves for the outcome of the review, with many predicting that tuition fees could rise from their current level of £3,225 a year to as much as £7,000.
In his speech at London’s South Bank University, Mr Cable said students would “almost certainly” have to pay more, and called for a “radical re-think” of how universities are funded.
He warned of the “severe financial pressure” to come and said there may even be a “period of contraction” in university budgets in the next few years.
Mr Cable said that by linking the graduate repayment mechanism to earnings, it may be possible to establish a system where low earners would pay the same or less than they do now, and high earners would pay more.
He earlier told the BBC that under the current system, “if you’re a school teacher or a youth worker you pay the same amount as if you were a surgeon or a highly-paid commercial lawyer”.
“I think most people would think that’s unfair,” he said.
He said that graduates, on average, earned £100,000 net of tax more over their lifetimes than comparable non-graduates.
There was a need to develop a university funding model based on the idea of less public support and greater contribution from those who benefit the most from it, he said.
Wider role for private institutions
At present, the government lends students money to cover the cost of fees, with graduates beginning to pay back the loan once they are earning more than £15,000 a year.
Mr Cable also set out ways of cutting the costs of higher education to both taxpayers and students – such as promoting two-year degrees, more students living at home and more flexible, part-time courses.
He also called for a wider role for private institutions in higher education, which could offer to teach such courses.
University leaders have warned cuts could be devastating and could damage the UK’s position as a world leader in research and higher education as well as the country’s ability to move out of recession.
The funding squeeze comes as record numbers of people are applying to university, figures due out on Friday are expected to confirm. Source: BBC
At a time when the government are introducing spending cuts of over £100 billion across various departments the need for non-EU ‘full fee paying’ students has never been greater.
Prime Minister David Cameron would be wise to take into account the £8 billion contribution to the UK economy made by international students when considering any cap on ‘immigration’ or changes to the student visa rules.
Students are not immigrants in the same way someone coming to the UK on a work permit and should not be included in any limits on migrants.
Stay in the UK under a tier 4 student visa does not accrue any automatic residency rights, and holders have ‘no recourse to public funds’.
International students are directly contributing the UK’s educational ‘export’ and provide jobs for thousands of British workers.
British and EU students pay around £3000 per annum in tuition fees for a degree course at a University, which does not cover the full cost of their higher education.
Non-EU students, on the other hand, are charged much higher fees starting at around £8000 closer to the real, non-subsidised cost of providing a degree level course.
Private colleges offer degree and MBA courses at lower fees by keeping administration costs to a minimum.
In his first major speech, Mr Cable acknowledged the ‘huge export earnings from overseas students’.
‘Our universities teach in English in a world that wants to learn in English. They are a major draw for internationally mobile companies deciding where to invest’. He said.
He also warned of future skill shortages.
‘The CBI estimates that by 2014 there will be unmet demand for 775,000 roles requiring higher level science, technology, engineering and maths (STEM). Around 60% of businesses expect problems recruiting staff with STEM skills over the next three years.’
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