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  • FIRST POST
    • MSE Jenny
    • By MSE Jenny 15th Jul 10, 4:55 PM
    • 1,236Posts
    • 3,568Thanks
    MSE Jenny
    "We already have a graduate tax - just a better version" blog discussion
    • #1
    • 15th Jul 10, 4:55 PM
    "We already have a graduate tax - just a better version" blog discussion 15th Jul 10 at 4:55 PM
    This is the discussion to link on the back of Martin's blog. Please read the blog first, as this discussion follows it.


    Please click reply to discuss below.
    Last edited by MSE Jenny; 16-07-2010 at 10:15 AM.
Page 1
    • trippy
    • By trippy 15th Jul 10, 5:38 PM
    • 525 Posts
    • 180 Thanks
    trippy
    • #2
    • 15th Jul 10, 5:38 PM
    • #2
    • 15th Jul 10, 5:38 PM
    That's what I thought. I just treat the student loan repayments like a form of tax. Though I can't see anywhere that it says when the graduate would revert to a normal tax code, surely they can't be on the graduate tax rate forever!
    • oldie21
    • By oldie21 15th Jul 10, 5:54 PM
    • 21 Posts
    • 3 Thanks
    oldie21
    • #3
    • 15th Jul 10, 5:54 PM
    • #3
    • 15th Jul 10, 5:54 PM
    and what if they don't last the three years or don't "graduate"??????

    only high-earnering successful graduates will be supporting them?


    (whereas now all tax-payers presumably support those that don't earn over 15k to repay their loans.....)
  • marky52
    • #4
    • 15th Jul 10, 6:41 PM
    • #4
    • 15th Jul 10, 6:41 PM
    How will this affect Scottish students?
    • DarkConvict
    • By DarkConvict 15th Jul 10, 7:03 PM
    • 6,249 Posts
    • 3,056 Thanks
    DarkConvict
    • #5
    • 15th Jul 10, 7:03 PM
    • #5
    • 15th Jul 10, 7:03 PM
    What gets me though, is that instead of going to university one could instead for say software engineering/computer programming, just do self learning and get the individual qualifications, then move into a low/similar job to get experience before moving to a graduate position without the graduate tax. A student loan is the way to go as those that take them out pay for it.

    I understand the government does subsidise the costs, but then maybe this is where it can change, the government subsides less and the students pay a little more. As it stands there are more people coming out of university than jobs available. You already need to aim for the 2:1 or above, and soon enough need a master qualification to go with it due to fierce competition. Whilst this competition does mean the clever students make it into industry to many continue there part time jobs in supermarkets and retail chains (my friends have). The government would be wiser to reduce university funding and re-invest in apprenticeships, getting them out of education and into work. If they wish to seek a change in there job then they can save money and invest in university education after.

    I may have some bias in this argument as I graduated only yesterday, top of year for computing students. So upping prices now would have less after on me.
    There is some value to the american system, however there prices are simply to high.
    Although no trees were harmed during the creation of this post, a large number of electrons were greatly inconvenienced.

    There are two ways of constructing a software design: One way is to make it so simple that there are obviously no deficiencies, and the other way is to make it so complicated that there are no obvious deficiencies
    • al223
    • By al223 15th Jul 10, 7:26 PM
    • 22 Posts
    • 234 Thanks
    al223
    • #6
    • 15th Jul 10, 7:26 PM
    Reduce the flunk rate!
    • #6
    • 15th Jul 10, 7:26 PM
    Apparently somewhere around 20% of university students flunk their courses, I'm guessing some of these would have been better off going straight into work or engaging in some other form of learning, so therefore surely the first thing to do to reduce the cost of higher education is to make sure the right people are going and that the right people are going to do the right courses. This also means there would be less people with large student debts despite not having graduated.

    I dropped out of university in 2002 after 4 years doing 2 different courses. I haven't worked through choice for the last year but prior to that I never earnt more than the 15,000 limit to repay my student loan. After dropping out, I felt like I was in a worse position than if I'd never gone to university, as I was older than school leavers but had nothing to show for it other than failing at university.

    On the other hand, assuming the graduate tax is only paying for universities, then surely the average student should end up paying at a much lower rate than they pay back their student loan, as they'll be carried by the highest earning graduates? Does it also mean that thousands of people can go to university, drop out and then never have to worry about paying for it?
    • jd87
    • By jd87 15th Jul 10, 9:47 PM
    • 2,273 Posts
    • 1,211 Thanks
    jd87
    • #7
    • 15th Jul 10, 9:47 PM
    • #7
    • 15th Jul 10, 9:47 PM
    How will this affect Scottish students?
    Originally posted by marky52
    Don't worry I'm sure those of us south of the border will continue to pay for your free studies.

    • DarkConvict
    • By DarkConvict 15th Jul 10, 9:48 PM
    • 6,249 Posts
    • 3,056 Thanks
    DarkConvict
    • #8
    • 15th Jul 10, 9:48 PM
    • #8
    • 15th Jul 10, 9:48 PM
    I think another issue is that courses are made to suit what students want to study, one problem of this is some courses are just not useful for gaining employeemnet.

    If courses were made to match the demand in the industry it may work out better.
    Although no trees were harmed during the creation of this post, a large number of electrons were greatly inconvenienced.

    There are two ways of constructing a software design: One way is to make it so simple that there are obviously no deficiencies, and the other way is to make it so complicated that there are no obvious deficiencies
  • ahannah
    • #9
    • 15th Jul 10, 10:49 PM
    • #9
    • 15th Jul 10, 10:49 PM
    Does anyone know if there are any plans to apply this in a retrospective way? more to the point how will this affect those of us who are already stuck paying off our student loans untill the age of 65? could it be that we'll end up paying 18% of our wages above 15K......PANIC!
  • Oldernotwiser
    I've always encouraged my clients to look on loan repayments as a graduate tax so I have a lot of sympathy for Martin's viewpoint. However, the fact he misses is the way in which debts of thousands of ponds put off many students from lower income families from going to university. For that reason, I think that a move to a graduate tax might well be a good thing,
    • jd87
    • By jd87 15th Jul 10, 11:25 PM
    • 2,273 Posts
    • 1,211 Thanks
    jd87
    Does anyone know if there are any plans to apply this in a retrospective way? more to the point how will this affect those of us who are already stuck paying off our student loans untill the age of 65? could it be that we'll end up paying 18% of our wages above 15K......PANIC!
    Originally posted by ahannah
    There's no way they could apply it retrospectively. Who is paying until 65? At the moment you only pay for 25 years then the rest gets written off.

  • foreversomeday
    I remember going to a university information day when I was 16 or 17 - so would have been the mid 2000s, and I clearly remember them saying to us "Don't think of it like a loan. Think of it like a graduate tax." - and I always have done.

    I think the last sentence about a loan ending once it's paid off is a good one though. Food for thought anyway.
    I don't believe and I never did that two wrongs make a right
    • tylerdurden
    • By tylerdurden 16th Jul 10, 7:22 AM
    • 20 Posts
    • 8 Thanks
    tylerdurden
    Dont we already have a graduate tax
    If graduates earn more over their lifetimes dont they/we end up paying a lot more tax (in the form of income tax and national insurance) anyway?
  • artumi_richard
    Fairness
    tylerdurden points out that those who earn more pay more tax anyway. This gets to a rant of mine regarding fairness.

    What is fairest

    Example 1: You are in a cafe with friends and the bill arrives at the end of the meal
    A) You each pay for what you ordered
    B) You split it equally
    C) You split the bill according to income, if one person had income of 100,000 another 50,000 a third earned 10,000. They pay 10,5 and 1.
    D) You split the bill according to income, but those who earn more pay even more than their proprotion in (C), so the contributions may be 13,2.50 and 50p.

    Example 2: You are the government and you wish to tax people's income.
    A) You charge everyone for exactly what they use
    B) You charge a flat rate of say 10,000
    C) You charge everyone 20% of their income
    D) You charge those who earn more a higher percentage.


    I think in Example 1 everyone would think A is fair, and in 2 everyone would think D is fair.

    Generally when people argue about taxes being fairer they are on shakey ground. There are different ways in deciding what is or is not fair, and we generally use different principles in different circumstances.

    In example 1 we know the people we are coming to agreement with. In example 2 we do not. Perhaps that explains the difference, perhaps it's something else.

    Anyway, that in mind, would it be fair to charge new graduates a graduate tax and not also those who made no specific contribution to their education?

    Would it be fair to charge a Drama graduate the same as a Maths graduate when their chances of earning more, due to their degree, is so far different. (I heard this is true on Radio4 on PM)

    Also, how much of the fees paid cover their education, and how much is to pay for the research that Universities do? Would a graduate tax actually be to fund higher education, or to fund a national research program which the whole country should be benefiting from?

    One last thought. I started Uni in 1999, and so I'm paying off my student loan at the moment. As we know, this means I have more tax to pay now, but is it such a good time to be paying. [Gross generalisation coming up:] In an ideal world early to mid twenties is when you want to be buying a house, getting married, having children and buying a car. Is this not the worst time to stick an extra 9% tax on income over 15k to these people?

    Does it come as a surprise that the average age of the first time home buyer, the average age of a first time parent and the length of time couples live together before marriage are all rising?
    • MSE Martin
    • By MSE Martin 16th Jul 10, 9:59 AM
    • 8,115 Posts
    • 42,285 Thanks
    MSE Martin
    I've always encouraged my clients to look on loan repayments as a graduate tax so I have a lot of sympathy for Martin's viewpoint. However, the fact he misses is the way in which debts of thousands of ponds put off many students from lower income families from going to university. For that reason, I think that a move to a graduate tax might well be a good thing,
    Originally posted by Oldernotwiser
    I udnerstand your view - i just think the whole systems been disgracefully poorly communicated - all the focus was on tuition fees.

    If we had financial education in schools that explained it properly your point would dissappear. To intro a new tax because people dont understand the current system seems overkill - just explain the current system better.
    Martin Lewis, Money Saving Expert.
    Please note, answers don't constitute financial advice, it is based on generalised journalistic research. Always ensure any decision is made with regards to your own individual circumstance.

    Don't miss out on urgent MoneySaving, get my weekly e-mail at www.moneysavingexpert.com/tips.

    Debt-Free Wannabee Official Nerd Club: (Honorary) Members number 000
    • Ferdy147
    • By Ferdy147 16th Jul 10, 10:04 AM
    • 128 Posts
    • 81 Thanks
    Ferdy147
    It's about time someone did some straight talking about university education.

    - There are way too many mickey mouse courses. We need to increase the standard of degrees as they really are cornflake packet stuff in a lot of cases.

    - There aren't jobs for the number of graduates that come out of university each year so increasing access to university places isn't going to achieve anything worthwhile. Yes it'll reduce the unemployed headline rate for a while but it'll also burden these students with a considerable debt that many cannot repay. Once they've graduated many will not be willing to accept lower ranking jobs because 'they have a degree' and so be more dependant on the state.

    - All students should have to pay tuition fees not just those from slightly well off families. Perhaps those that aren't in a financial position to pay can have them deferred and pay them at a later date. Payments taken from salary at the same time as Income/NI Tax so that they can't default.

    - Having been a student I know the 'hardship' students go through. That's not hardship, it's reckless and irresponsible spending of money. There may be exceptions to this of course but everyone I saw in hardship at uni were big on party's, alcohol, gadgets, mobile phones, laptops, fashion etc......living beyond their means essentially.
    • dave4545454
    • By dave4545454 16th Jul 10, 10:33 AM
    • 1,870 Posts
    • 2,649 Thanks
    dave4545454
    What gets me though, is that instead of going to university one could instead for say software engineering/computer programming, just do self learning and get the individual qualifications, then move into a low/similar job to get experience before moving to a graduate position without the graduate tax. A student loan is the way to go as those that take them out pay for it.

    I understand the government does subsidise the costs, but then maybe this is where it can change, the government subsides less and the students pay a little more. As it stands there are more people coming out of university than jobs available. You already need to aim for the 2:1 or above, and soon enough need a master qualification to go with it due to fierce competition. Whilst this competition does mean the clever students make it into industry to many continue there part time jobs in supermarkets and retail chains (my friends have). The government would be wiser to reduce university funding and re-invest in apprenticeships, getting them out of education and into work. If they wish to seek a change in there job then they can save money and invest in university education after.

    I may have some bias in this argument as I graduated only yesterday, top of year for computing students. So upping prices now would have less after on me.
    There is some value to the american system, however there prices are simply to high.
    Originally posted by DarkConvict
    congrats on the first honours i got one too in manufacturing engineering and management in 1992 during the last recession. unfortunately it never got me a paid job due to manufacturing being killed off in this country but i'm still proud of my achievement.

    i agree with what you say about apprenticeships. personally i think an apprenticeship is worth a lot more than a degree and is far more likely to result in a paid job unlike all the many thousands of unemployed graduates.
    Martin has asked me to tell you I'm about to cut the cheese, pull my finger.
    • DCodd
    • By DCodd 16th Jul 10, 10:45 AM
    • 7,803 Posts
    • 10,657 Thanks
    DCodd
    I may have misread this but it seems that there is no point where the tax will be removed, in other words no point where the debt is repaid is that correct?
    Always get a Qualified opinion - My qualifications are that I am OLD and GRUMPY
  • Oldernotwiser
    There's no way they could apply it retrospectively. Who is paying until 65? At the moment you only pay for 25 years then the rest gets written off.
    Originally posted by jd87
    The question of when the debt is written off depends on when it was taken out.
  • Oldernotwiser
    I may have misread this but it seems that there is no point where the tax will be removed, in other words no point where the debt is repaid is that correct?
    Originally posted by DCodd
    It won't be a debt anymore so the question of repayment won't apply.
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