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What are the changes to Tuitions Fees and the new Graduate Tax?

Key Points:

  • Threshold to start paying is £21,000.
  • Each month, 9% of gross income above threshold goes toward repaying debt.
  • Interest rate on debt will be RPI linked (inflation) - as well as being progressive - i.e. 0% for incomes of £21,000 rising to 3% + for incomes over £41,000.
  • If the debt is not cleared within 30 years, it will be written off.
  • Maintenance grants will rise for households with earnings less than £25,000 - from £2,906 to £3,250.
  • The grants cut-off will be lowered from the current household income of £50,000 to £42,000.
  • Tuition Fees in England can go up to £9,000 - up from the current limit of £3,290 - and are expected to average £6,000.
  • The establishments charging more than £6,000 will have to become more open with bursaries, summer schools, outreach programmes - help people from poorer backgrounds get access to higher education.
  • The Institute of Fiscal Studies estimates that with a three year course, at £7,500 per year - the top 10% of graduates will clear their debts in 15 years, however a middle-earning graduate (£48,850) would need 26 years to pay their debt back. 10% of graduates will end up paying back more than they borrowed, after factoring inflation.
  • These plans are to be introduced from September 2012, so students who apply in 2011 but defer to 2012 will pay the increased fees. Anyone starting a course before September 2012 will not be subject to the increased fees.

Graduate Tax?

  • Vince Cable, Lib Dem, proposed this tax in July.
  • The plan now has the support of Labour leader, Ed Miliband, and the NUS (National Union of Students).
  • Under this plan, graduates would pay a percentage of their income, once graduated, to the Taxman. The increased taxation would then be apportioned to the universities somehow.
  • Possibly equivalent to another 3 pence on top of 'normal' income tax.
  • In a pure form, this would be levied for the whole of the individual's working life - However, it is still undecided as to what the mechanics of the scheme will be - whether the extra taxation would stop at a specific figure or time period is unknown as yet - nor if the tax kicks in after a set banding.
  • Possible increases in taxation of up to £16,000 for top earners - may result in more tax emigration.

What do you think about these changes to higher education funding and fees?

Your Comments!

Tuition Fee IncreasesGraduate Tax

Top 20 Scores

13/12/2010 5:49 PMSunjian (Vilnius, Lithuania)80187235
16/12/2010 9:03 PMCamillaface (London, United Kingdom)77155202
17/12/2010 11:06 PMA N Other (Mckinney, United States)75117156
14/12/2010 2:20 AMA N Other (Santa Monica, United States)74133180
16/12/2010 7:39 PMTamara (United States)73126172
13/12/2010 8:35 PMA N Other (Norwich, United Kingdom)73133183
14/12/2010 5:28 PMBoab (United Kingdom)73171233
12/12/2010 5:35 PMKibble (Liverpool, United Kingdom)72131181
06/03/2011 1:49 PMTimmy (Birmingham, United Kingdom)72138191
12/12/2010 5:43 PMLemmy (Oxford, United Kingdom)68122181
21/01/2011 10:30 AMSuc It Arun ()68148218
13/12/2010 4:36 PMFart (Pass Christian, United States)68144211
26/01/2011 11:32 AMRowan Sucks ()68139203
12/12/2010 2:25 PMTom (Birmingham, United Kingdom)68123180
14/12/2010 4:52 AMGistrike 34 (Puerto Rico)67125187
14/12/2010 2:19 AMJaymz78 (Santa Monica, United States)67121180
21/01/2011 10:27 AMWaay Rowan ()67148220
13/12/2010 5:22 PMCharles (Ravenna, Italy)67122183
12/12/2010 3:31 PMAndrew (Belfast, United Kingdom)67122182
16/12/2010 4:56 AMA N Other (United States)67132195

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