A senior Conservative source has suggested that the coalition government are to reject the idea of a graduate tax to pay for university fees in England.

Liberal Democrat business secretary, Vince Cable, whose department is responsible for universities, set out the advantages of a graduate tax plan as a fairer repayment system. Under this system the government would pay a student’s tuition fees, and graduates would then be taxed according to the amount they earned. Therefore ensuring that a low-paid teaching assistant would pay far less than a city banker for their degree.

The BBC has reported that a Conservative source has said that this plan has been dismissed by the government as it could damage the ties between the student and the university, with the tax money going to the Treasury instead of the institution. The report said that ministers are instead “exploring the options for a scheme that allows graduates to contribute towards their university education in a way that maintains the direct payment from the individual to the university.”

This autumn, Lord Browne, the former chief executive of BP, will be leading an independent review into whether tuition fees should be raised or replaced. The decision could cause serious divides within the coalitions government, as a key part in the Lib Dem manifesto was to abolish tuition fees.

So what are the implications?

Short term- due to the current economic climate, universities are going to be stretched further and face more challenging times ahead. If the fees increase or graduate contributions increase, it will be a number of years before students start paying back their fees to the government, meanwhile the government are going to have to find extra funds in order to pay the raised fees.

Long term – any policy choices made now could have far-reaching implications on the number and shape of universities. It could affect the type of work they do, the number of people who study and how they will study, as well as the accessibility of university for low-income students.

Are you planning on studying in the UK? What are your views on the matter? Please comment below.