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Employers should pay a levy for each graduate they employ to help fund tuition fees, according to a new report.
In order to balance the cost more fairly between students, taxpayers and employers, businesses should make a greater contribution, says the Higher Education Policy Institute (HEPI) paper, Fairer Funding: The case for a graduate levy, by Johnny Rich, the chief executive of Push, a not-for-profit outreach organisation.
Under the proposed system, the amounts would be equivalent to the student loan repayments made under the current funding system in England. Revenue from graduate levies would be paid directly to the university where each graduate studied.
Institutions would be financially sustainable because they would share an investment in the future employability of their students, rather than because they maximise their student intake.
The paper comes in advance of the Augar Review’s report in the New Year on the future of Post-18 Education and Funding. It also comes as the Office for National Statistics prepares to announce possible changes to student loan accounting rules that could create a black hole in the Government’s budget deficit plans.
Rich also argues for a redistribution of funds between higher education institutions based on their ability to attract and support students from poorer backgrounds. This would give institutions an incentive to support social mobility and ensure access money is spent more effectively.
“For too long, higher education funding has been a battleground of competing interests between taxpayers, students, employers and universities,” he said. “Over three decades, students have come off worst. A graduate levy would mean that everyone shares the same interests: students having opportunities to do high-quality courses, becoming well qualified for good jobs, filling the nation’s skills gaps.
“The proposal is designed to minimise student debt, but also to ensure employers don’t pay more than they contribute now, unless they get more. The same goes for taxpayers.”
Nick Hillman, director of HEPI, said the paper tackled the challenge of trying to secure greater support from employers.
“It is a challenge no one has been able to solve adequately since the Dearing report called for higher education to be a shared endeavour between government, students and employers over a generation ago. We hope it will serve as a useful contribution to the debate on an under-studied but crucially important area.”
Companies with an annual paybill of more than £3 million currently have to pay an apprenticeship levy. Employers then use an online digital service to access the fund and pay for training for apprentices.
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