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Mike Gow 高英智
+ Your AuthorsArchive @mikeygow Lecturer (Asst Prof) in Bus Mgt @EHU_Business Consumerism, Citizenship & Identity in Xi Jinping’s China. Father 父亲 Husband 丈夫 Brother 兄弟 Son 儿子 #Everton #Celtic Jun. 21, 2021 3 min read

A very different system in #UK #HE.

But even speaking to students (and parents) on Open Days, the anxiety around #StudentLoans and graduating with #debt

So a little thread here explaining the UK system and policy I would *love* to see adopted by @UKLabour

We have approx 40% gross enrolment in #HE here in the UK.

The majority of UK students (66%) finance their studies and some living costs through government student loans with an interest rate of 1.75%. Tuition is £9250 per year for most degrees

Average debt for graduating students is £35k

Student Loans are currently forgiven if not repaid after 30yrs.

So let’s think about the average student and how this impacts

For a student who graduates with £35k debt - that is a major cause of anxiety for them and, in many cases, their families.

Yet the repayment system needs to be understood.

Students currently repay 9% of earnings over £27.5k gross salary per annum.

So if you owe £35k and earn under £27.5k you pay……nothing.

Once you earn over that £27.5k line, you pay only on what you earn *over* that amount at 9%

So a graduate landing a £30k salary will pay:

£2.5k*0.09 = £225.

Once they’re earning £40k per annum, repayments increase to £1125 per annum.

These repayments are taken through Pay as You Earn along with income tax, National Insurance contributions. If self-employed, repayments made directly to Student Loans Co (the govt body handling loans)

Effectively, we don’t have a student loan system.

We have an inequitable graduate tax system that hits only those who could not afford HE without loans

What @UKLabour @Keir_Starmer @RLong_Bailey really need to do consider is an equitable graduate tax as a centre piece of policy now, and make this a major strand of campaigning for the next election.

Part of “social contract” approach to taxation - along with also targeting corporate citizens engaged in tax avoidance - @UKLabour needs to do a better job articulating how and why we all make contributions to a better post-Brexit Britain - to education, health and infrastructure

With regards to a #GraduateTax, this should be done for several crucial reasons:

1. To help students and families of the more clearly understand their “debt problem” and alleviate the anxiety that plagues many students throughout their time at uni, and into their early career.

2. To ensure that *all UK graduates* - regardless of whether they needed loans to go to uni - make a consistent contribution over their working lifetime to the continuing health of the HE sector.

3. To move from the regressive taxation of the current “loans” system, to a progressive taxation system for HE linked to earnings

This also, addresses the issue of loans forgiven after 30yrs, and ensure that all graduates contribute until retirement.

4. Crucially - to save our HE sector from commoditisation.

Students (and universities themselves) currently view students as “customers” on account of them paying tuition fees to unis (directly or via student loans and local ed authorities)

We need to change this to reframe tuition fees not as a *purchase* but as an *investment* in young people.

There is no downside to transforming this system - which gives us the worst of both worlds: a loans system that results in mass defaults while creating a demotivated workforce anxious about their *debt* levels, while commodifying HE and killing it as an educational experience

A progressive graduate tax system would still ensure public and private providers are accountable to society - while also alleviating stress for graduates, and expanding, increasing and extending contributions from graduates to secure UK HE’s world class status.

You can follow @mikeygow.


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