by using student loan repayments to tackle the situation would indefinitely result in hurting graduates on average earnings while favouring their wealthy peers. According to the Institute for Fiscal Studies (IFS), it is the income tax system that the chancellor Rishi Sunak should use to raise revenue from the highest-paid graduates., as the organisation constructed a calculator which demonstrated how any substantial changes to the loan system would only mean graduates on average earnings will pay more, while wealthier individuals pay less out of their income.
“With a series of tweaks to the student loans system, successive chancellors have painted themselves into a corner,” Ben Waltmann, a senior research economist at IFS, said. “The system is expensive but there is essentially no way to raise more money from it without hitting borrowers with average earnings more than the highest-earning ones. If [Sunak] wants to raise more from the highest earners, the chancellor will need to use the tax system.”
Meanwhile, institutions providing higher education complain that tuition fees from British students alone would be insufficient to meet their costs and that they may have to rely on international students to tackle the situation. According to the provost of the University College London, Michael Spence, domestic fees of £9,250 a year fail to fund undergraduate courses at his institute, with an additional £90 million spent last year by UCL to support teaching during the pandemic.
“It’s really important that the UK doesn’t go down the Australia route in that way,” he said. “Australia digs things out of the ground and grows things and has clever people. England only has clever people, it doesn’t have anything else. So making sure that innovation and research are protected and fostered is really important.”
