Vince Cable suggested that graduate tax would be a fairer repayment system of university fees, however it is rumoured that the proposal is an “unlikely” option.

Graduate tax is reportedly out of favour for a number of reasons. Ministers say it would be unfair to expect high-earning graduates to pay more than the cost of their degree.

There is a concern that successful graduates would emigrate in order to avoid the extra tax placed on them in the event of a graduate tax system.

The biggest fear about graduate tax is that students would be repaying their universities fees directly to the government, therefore breaking the direct link between students and university. This would remove the incentive for a university to ensure that its graduates become employed.

Ministers confirm that the graduate re-payment system will change, however the various proposals have not been considered favourable. There is suggestion that a combination of proposals will be employed. Although there will not be a pure graduate tax system, the new system may involve some graduates re-paying more than others whether dependent on their success or the type of course studied.

Source: The BBC, 21/07/10