There seems to be some talk at the Lib Dem conference about rebranding the new student loan scheme as a graduate tax (see Elizabeth Gibney’s piece via link). However earnest Simon Highes and Vince Cable sound, this is a wheeze that is doomed to failure for the simple reason that the new scheme is not a graduate tax.
With a graduate tax, it works like income tax. The basic principle is that all graduates earning the same amount pay the same. But under the new scheme from 2012:
* You have to pay even if you dont graduate
* The amount you pay back depends on where you study
* The amount you pay back depends on what you study
* The amount you pay back depends on when you study
* The amount you pay back depends on how long you study for
* The amount you pay back depends on how much you already paid back in previous years
* Your payments terminate when your loan is paid off, not when you stop working
* You have to pay even if you leave the country
* Foreign nationals who graduate from an English university and return home also have to pay
* You have the option to pay off your loan early and not pay anything in future years
* If the government goes ahead and sells off the student loan book then, unlike a tax, graduates wont even be repaying the government but a private company, with the government simply acting as an all-powerful debt collector.
The truth about the new scheme is that it is neither what we understand as a tax, nor what we usually understand as a loan, and I wish people would stop trying to force it into one container or the other. It just is what it is.