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Elsewhere

In which I am a little radical:

We need something more radical, which creates the right incentives. The simplest way of doing this is to remove the threshold for repaying tuition fees. The moment you start earning after graduating, whatever your job, you start repaying the cost of your degree, and without any writing off or loan forgiveness down the line. On the other hand, any tax you pay at the higher tax rate (the current 40% one) is treated as a repayment of your student loan. That you are paying higher rate income tax is proof perfect that society values your skills and output. You have put that three-year training to good use and are adding value to society.

Unfortunately the editing process left out my two uses of the phrase “modest proposal” which would have alerted at least some readers to the idea that this is not wholly, purely and entirely a serious suggestion for public policy.

11 thoughts on “Elsewhere”

  1. “Which is just another reminder of how difficult it is to run the economy properly within the constraints of politics.”

    On the wireless today: Government ministers and civil servants are having to work out the details of subsidy programmes for energy users who are not on the mains and missed out by the government’s energy support scheme.

    Who’d’a’thunk that keeping track of millions of individual price decisions would be too big to hold in the heads of government experts?

  2. It’s a nice idea and I like it in principle.
    Applying it to England and Wales where income taxation reduces when the 40% band is crossed at £50,270 of earnings would result in a marvellous double win for those affected. Not a fan of regressive taxation levels in the first place and this would compound it, but the idea is sound.
    Why does income taxation reduce at £50270? – because employees NI reduces from 12% to 2% and the increase in PAYE from 20% to 40% does not overtake that if you offload half or more of your additional earnings into a pension or other suitable vehicle like a charity your wife directs.

  3. “On the other hand, if you do a course – say, Finance, Economics or Law – where you can expect a high post-graduate salary”

    Given the major role of economists in generally fucking up the UK economy over the last 70 years, God know why anyone would pay an economist a penny. If they were all rounded up and sent to Norfolk to hoe cabbages the country would undoubtedly be a better (and wealthier) place.

  4. “other suitable vehicle like a charity your wife directs”: I must be out of touch. Who’s that a dig at?

    P.S. Your editors must be ignoramuses, Mr W.

  5. What if taxes were priced like energy?

    What if all your money was taxed at the highest rate, just like energy all trades at the price of the last unit produced?

    Double standard, much?

  6. The problem with our host’s suggestion is that it doesn’t make things terribly clear up front to the course-takers what the costs will be. And it needs to be very clear if it’s going to get through the skulls of those who currently think that 3 years of Dicking About Studies is worthwhile.

    The trick would be to have private lenders bidding for student loans based on subject and institution, with repayment terms and interest rates for different courses advertised up front when applications are being made. Computer Science at Cambridge would attract a much lower interest rate and repayment schedule than Underwater Basket Weaving at Frome Poly. If nobody is willing to offer loans for a course, this is a pretty good indication of its value…

  7. Take the government out of it. Let the university worry about loan repayments on its own dime, or a third-party lender if that’s the way the student wants to go. Moral hazard is the thing.

  8. There’s a bot (or possibly a cunning simulation of a bot) that posts continually on ElReg using the moniker: amanfromMars 1. It appears they may have transferred their allegiance to this blog.

  9. “The economists who make policy are the failures. The ones not bright enough to go into The City…..”

    Well given the damage done by the dim ones I don’t think we can take the chance of letting any of them stay at large. The Norfolk Cabbage Fields it is!

  10. The solution is simple.

    Today the government gives a loan to the student who pays the university. Then when the student starts to earn, repays the loan to the government.

    Instead the government should loan the money to the university, the university deducts tuition and gives the balance to the student. When the student starts to earn they pay the university for the tuition (spread over a number of years). Then starting 5 years after graduation, the university repays the government spread over the same period of time. The university cannot default on it’s loan. The student may not meet the earning threshold or may default. No matter the university repays the debt in all cases. This would encourage the university to finance degrees wherein the earning potential is enhanced.

    Of course concurrent with this we need to bar entry to the civil service those students with “resentment studies” degree. But even if this didn’t happen sufficient disincentives would have been created to focus minds somewhat.

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