The Ranting Kraut

19.3.2006 – 27.9.2010

Vince Cable’s Brain Drain Subsidy

Posted by rantingkraut on July 15, 2010

Vince Cable’s proposal for a graduate tax is prominently discussed in the news. Cable proposes a graduate tax which would make repayments of student funding dependent on earnings. Partly, this is already the case: student loan repayments only start after a minimum earnings threshold has been reached. A graduate tax could vary more finely with the salary but, more importantly, it would probably not end after the original fees have been repaid.

This is the most important difference: the best and the brightest can easily skip repayment altogether by working abroad. If you owe the government a fixed amount of money any interest you have in clearing your debt does not vary with your place of residence. Your tax burden however does, hence there will be an added incentive for graduates to emigrate.

Another half baked proposal is that of promoting two year degrees. This is feasible in principle (the University of Buckingham has been doing it for years). The change comes at a cost, however: one option would be for new teaching staff to be hired by universities to spread the workload and new office space to be built to accommodate them. The other would be to cut down on research and reduce British Universities to the status of higher education colleges.

If cost savings are the objective, research will have to go. This may well be what the government wants, but at least they should spell this out to make it clear to domestic and (full fee paying) international students what exactly British universities do and do not offer.

A third, and probably better, option would be for Universities to go completely private. In this way, students would pay full fees, government could give them loans if it saw fit to do so or refrain from doing so if it didn’t. The cost for government would be that it could no longer use the university system as a social engineering tool. On the other hand, academic standards would probably be better protected.

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