The Confederation of British Industry (CBI) have warned this week that thousands of the UK’s most promising graduates could be prompted to emigrate if plans to charge ‘graduate tax’ are brought in. The tax, suggested by business secretary Vince Cable, would mean university leavers are charged for their degrees according to how much they earned.
The current student loan system sees all graduates pay back the loans once they earn above £15,000 a year and all graduates pay the same amount regardless of their salary. Under this new proposed system, the highest earning graduates would end up paying considerably more in total than those in low-paid jobs.
The director-general of the CBI, Richard Lambert, feels there are high risks to the proposed tax, “If we had [this tax], UK students would have an incentive to work overseas to escape paying, especially when the top rate of tax is 50%”. Lambert feels that one alternative might be to keep the current system but charge students a higher rate of interest than the current low rate.
A review of student finance has been requested to suggest ways of reducing the public spend on student funding without affecting access to degree courses for the poor. This will be published before the spending review, due in mid Autumn.
More on this can be read on the Guardian website here.