http://exquisitelife.researchresearch.com/exquisite_life/2010/12/how-to-read-david-camerons-big-speech-on-tuition-fees.htmlCrucial quote:
With our new system, the poorest quarter of graduates will pay back less overall than they do currently.
Arguably. The IFS today also says the poorest 30 per cent will pay back MORE than they do under the current system. It all depends on what you mean by “poor”.
Here's the IFS paper. The question is whether you judge "the poorest" as "the poorest in their lifetime earnings", or "from the poorest families at the moment". For their lifetime earnings, Cameron's proposals are actually progressive - because the graduates who end up in low-paying jobs never pay back the whole loan. But, compared to the current system, his proposals hurt those from low-paid
families.
By decile of graduate lifetime earnings, the Government’s proposals are more progressive than the current system or that proposed by Lord Browne. The highest earning graduates would pay more on average than both the current system and that proposed by Lord Browne, while lower earning graduates would pay back less. By decile of parental income, graduates from the poorest 30% of households would pay back less than under Lord Browne’s proposed system, but more than under the current system. While all graduates from families with incomes above this would pay more, graduates from the 6th and richest (10th) deciles of parental income would pay back the most under the proposed system.
http://www.ifs.org.uk/bns/bn113.pdfSo those from the lowest-paid 30% households will get less benefit from going to university than they do now. At the moment, university acts as a good way of evening out wealth a bit - get a degree, and you'll more likely get a decent paid job. But this decreases the chances of you coming out materially better from university. When unemployment is high, and there are few jobs available for young people, many may take the risk of going to university anyway, rather than being unemployed or having to take jobs with no prospects at all. But if unemployment falls a bit, I think we'll see a steep decrease in people from poorer families going to university. If they get a chance of a job without a degree that pays over £21,000, why subject themselves to an extra 9% tax over that amount?
The other thing is that this forces 18 year olds to make one of the most important financial decisions of their lives, which they can't then go back on. It forces them to see university as a financial investment, from which they need to increase their future earning power enough to be bale to pay back the money. And having to work that out at 18 would surely be tough.