READ BETWEEN THE SPIN - QUIETLY ANALYSE THE FIGURES: IFS comment on tuition fees (South Dorset Liberal Democrats)

South Dorset Liberal Democrats <info@southdorsetlibdems.org.uk>

READ BETWEEN THE SPIN - QUIETLY ANALYSE THE FIGURES: IFS comment on tuition fees

December 13, 2010 3:18 PM

WHAT'S THE ARGUMENT ABOUT ? What's the difference from difference from a graduate tax.

(Radio 4 'More or Less' with the Institute for Fiscal Studies - 10.12.10)

The department of Business Innovation & Skills has put all the projections on its website. but the IFS has done a far more detailed projection based on a range of likely actual earnings.

Assuming a loan of £30,000 over 3 years including living expenses a graduate earning below £35,000 will pay back little or nothing at all - about £5 a month; a graduate earning up to £50,000 will pay back less than half of what they borrowed; a graduate earning more than £70,000 will pay back the full amount of the loan.

Lorraine Dearing of the IFS projects that around 50% of graduates will not pay back the loan, which will be written off after 30 years.

"We estimate that the average graduate will be paying back £25 - 30 a month of their fees. The lowest earners will pay back up to £6,000 over 30 years, the highest up to £40,000 including interest."

For those who are not making enough money to pay the loan back immediately it's functioning as a GRADUATE TAX. Graduates will pay an extra 9% on their earnings over £21,000 a year.

According to the IFS lower earning graduates will pay less than under the current system. 22% will pay less than they do today with the threshold rising from £15,000 to £21,000.

"Taken as a whole is this new tuition fee system progressive compared with the system we've been using in the last few years ?"

"The answer is YES:

1) the more you earn, the more you pay, whereas NOW middle income to higher income graduates pay roughly the same

2) Because graduates tend to come from high earning backgrounds and go on to earn higher incomes, most university funding will now come from graduates rather than from lower earners on general taxation."