Since the Conservatives and Liberal Democrats formed a Coalition Government in May 2010, how we finance undergraduate tuition in the face of growing demand, global competition and public sector retrenchment has remained a sensitive political issue.
In this publication, the Social Market Foundation outlines a new funding model which takes the best of two existing proposals – tuition fees and a graduate tax – to build a system that creates a fair market for students and universities alike. This model ensures that access to university remains affordable for all, reduces public expenditure on the HE sector, and maintains university revenues, despite public spending cuts, for those institutions that deliver good returns for their graduates. Most importantly, the hybrid model represents a progressive system where higher-earning graduates pay more than lower-earning graduates, while creating a market that rewards institutions that deliver benefits for graduates and employers.