The newly proposed graduate tax system in Britain caused an animated discussion on whether it is appropriate or not, considering the students’ quality of life during and after their studies. The discussion arose when figures were published that showed how many young people in Britain are currently in debt because of high tuition fees. Many people argue that this system proposed by the National Union of Students (NUS) really discriminates against the people who work hard enough to obtain well paid jobs in their future life. Therefore, this essay will assess if a graduate tax system could be an appropriate alternative to the existing tuition fees by analysing the ideas behind both approaches.
The current top-up tuition fees result in the fact that many young people (44% of the 18-24 year-olds) are not saving any money at all because they need all they have to pay for their studies. Although 64% of the students are now more concerned about their financial situation than ever before, they are unable to tackle their problems. Nowadays, about 8% of the graduates are spending more than half their salary on unsecured debt which shows the struggle to pay back unsecured loans that some students face after graduation. Only young people from more affluent households are able to pay the tuition fees without making any debt.
The graduate tax system benefits the people who work in low paid industries. This system is based on the notion that graduates should make contributions from their salary for a fixed period of 20 years. The amount depends on the individual salaries, which means that the top fifth of earners would have to pay 2.5% of their salary (about 125 each month) whereas the bottom fifth would pay 0.3% of their monthly income (about 5 per month). People who earn less than 15,000 a year would not have to make any contributions. The contributions would be paid into a trust fund, the Higher Education.
