An entirely different approach is for students to take out a loan for a specified sum; to repay through an addition to their income tax or National Insurance contributions; and for repayment to be 'switched off' once the loan has been repaid. Under this arrangement, no one repays more than they have borrowed. It is not a tax, both because it is voluntary (no one is forced to take out a loan), and because it is directly related to the sum borrowed. All that is happening is that loan repayments are collected in a way that reduces the risk faced by individual students (thereby assisting access) and is administratively cheap.
The great advantage of the second approach is that since repayment is secure, it would be possible for students to borrow from the private sector, producing additional resources for an over-stretched system of higher education at minimal cost to the taxpayer.
Department of Economics
London School of Economics
25 JuneReuse content