Replace tuition fees with a free-market graduate tax
27 February 2015
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The IEA propose an alternative method of higher education funding
Commenting on the Labour Party’s pledge to reduce tuition fees, Mark Littlewood, Director General at the Institute of Economic Affairs, said:
“Reducing the ceiling for tuition fees down to £6,000 would make universities increasingly dependent on the public purse. This is a bad policy at a time when reductions in government spending are still necessary and will lead to yet more government interference in how universities are run.
“Most of this extended taxpayer subsidy will go to those who earn the most after graduation and is likely to be funded by an horrendously complex and damaging change to the way pensions are taxed.
“The current university funding model leads to bad outcomes for both the provider and recipient. Students take on vast amounts of debt while often seeing little additional value from their courses, whilst swathes of red tape continue to bind universities, which still claim to have insufficient funding.
“Adopting an alternative system, whereby graduates agree to pay a proportion of their incomes directly back to the institution from which they graduated would better align the interests of the university and the student. Not only would universities be incentivised to provide better value for money, but they could also be freed from many of the regulatory burdens they currently face.”
To arrange an interview please contact Camilla Goodwin, Communications Officer: 0207 799 8920 or 07821 971 443.
Notes to editors:
To read the full report, Universities challenged: funding higher education through a free-market ‘graduate tax’ , click here.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
The IEA is a registered educational charity and independent of all political parties.
“Reducing the ceiling for tuition fees down to £6,000 would make universities increasingly dependent on the public purse. This is a bad policy at a time when reductions in government spending are still necessary and will lead to yet more government interference in how universities are run.
“Most of this extended taxpayer subsidy will go to those who earn the most after graduation and is likely to be funded by an horrendously complex and damaging change to the way pensions are taxed.
“The current university funding model leads to bad outcomes for both the provider and recipient. Students take on vast amounts of debt while often seeing little additional value from their courses, whilst swathes of red tape continue to bind universities, which still claim to have insufficient funding.
“Adopting an alternative system, whereby graduates agree to pay a proportion of their incomes directly back to the institution from which they graduated would better align the interests of the university and the student. Not only would universities be incentivised to provide better value for money, but they could also be freed from many of the regulatory burdens they currently face.”
To arrange an interview please contact Camilla Goodwin, Communications Officer: 0207 799 8920 or 07821 971 443.
Notes to editors:
To read the full report, Universities challenged: funding higher education through a free-market ‘graduate tax’ , click here.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
The IEA is a registered educational charity and independent of all political parties.
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