NUS calls for 'graduate tax' to replace top-up fees

The National Union of Students (NUS) today published radical proposals for an alternative means of funding universities in England, as the number of signatories of a Downing Street website petition against the current top-up fee system neared 30,000.

NUS is pushing for MPs to address the issue of student debt urgently, with more than 300,000 graduates set to enter the workforce this summer.

The first generation of graduates to pay top-up fees, these students will leave with thousands of pounds of debt. Meanwhile, half of all firms have admitted that they will not be offering them any jobs. Experts are warning that unemployment among 16-24 year olds will reach the one million mark by September.

Key elements of NUS’ proposals include:

• A new People’s Trust for Higher Education would be established, to prevent an open market from emerging within higher education.
• Top-up fees would be abolished. Instead, former students would make contributions to the Trust for a fixed period of twenty years after they complete their courses.
• Graduate contributions to the Trust would be variable and progressive; rates of contribution would range from 0.3% for the lowest fifth of earnings, to 2.5% for the top fifth.
• Payments would be more affordable; for example, a person earning £30,000 a year would be £37 better off each month than under the current system.
• After twenty years of operation, total revenue from the system would be £6.4bn a year, and after forty years it would be £8.5bn a year. This compares with estimated revenue of £6bn a year from fees under the current system, if the cap was set at £5,000.

NUS President Wes Streeting said: “NUS is proud to be the first organisation to stick its head above the parapet and propose an alternative to the disastrous top up fee system. We hope that the higher education sector and MPs from all political parties will engage with us in a proper debate on this issue, rather than simply kicking it into the long grass and hoping that it will go away.
 
“As the first generation of students to pay top up fees prepares to leave university with unprecedented debt levels, more than half of employers are not recruiting graduates, and experts are warning that unemployment among young people is set to reach the one million mark by September.

"This lost generation faces a summer of misery. In this climate it is laughable that some vice chancellors are arguing that students should pay even higher fees.

“NUS’ proposals would give universities double the amount of funding they currently receive, while allowing the children of poorer families to go to university without the fear of debt. They would also prevent the emergence of a market in higher education, where only the rich could afford to attend our most prestigious universities.”

According to a recent report by Universities UK, graduates would owe an average of over £26,000 if the cap on fees were raised to £5,000 a year, and over £32,000 if the cap were raised to £7,000 a year.

Despite this, a BBC survey in March found that more than half of university vice chancellors want to charge students even higher fees, calling for charges of at least £5,000 per year, or for there to be no upper limit.