Graduate tax proposal

If the proposals become a reality, students will repay their tuition costs through taxation once they started working, with higher earners paying more.

Business Secretary Vince Cable said this week that students would "almost certainly" have to pay more as funding cuts hit the university sector, and called for a radical re-think of how universities are funded.  But critics have said such a tax will simply rebrand student debt.  Many predict that university tuition fees could rise from their current level of £3,225 a year to as much as £7,000.

Mr Cable said that by linking the graduate repayment mechanism to earnings, it may be possible to create a system where low earners would pay the same or less than they do now, and high earners would pay more.  He said that on average graduates, earned £100,000 net of tax more over their lifetimes than comparable non-graduates.

Whilst the NUS has welcomed the graduate tax proposal, it warned any proposed alternative must be genuinely fair and progressive to win the support of students.  It has suggested that graduates earning over more than £15,000 should contribute 5% of their gross earnings over that figure to pay for their university education.