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Graduates to Pay More than Millionaires
December 3, 2003 12:00 AM
Lib Dems are Campaigning for a Fair Deal for Students
Calculations made by David Rendel MP, Liberal Democrat Spokesperson on Higher Education, and announced during the debate on the Queen's Speech in the House of Commons today, show that an average graduate in 2010 would need a salary of £40,000 in order to pay off £1,000 of his £33,000 loan each year. On this salary, he would be paying a marginal tax rate of 50%. Even then it would take him about 20 years to pay off his loan.
Meanwhile a graduate on a salary of £25,000 would be paying a marginal tax rate of 42%. Far from paying off his debt, such a graduate would find his debt rising each year for the rest of his life.
Both these graduates would be paying a higher marginal rate of tax than a millionaire who is not paying off a student loan.
Mr Rendel challenged the Labour Government to say if they felt this was a fair way of paying for Higher Education.
Assumptions behind the calculations:
- Inflation of 2.5%
- Threshold for payments is raised to £20,000
- The figure for graduate debt by 2010 (£33,000) has been calculated by Barclay's Bank.
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