Pearson Business School 4 min read

Why a Graduate Levy is not a viable way to improve social mobility in universities

Elizabeth Miller posted on

Supporters of the idea say that the levy would shift the financial burden away from students to companies, making it a fairer system of funding. At first glance, this approach looks appealing. Far too often graduates come straight out of university ill-prepared for the world of work and without the skills employers would like them to have. The introduction of a graduate levy has the potential to change this. As employers would be paying for the course fees they would likely have an increased role in developing and crafting higher education courses. This would mean that institutions would have an incentive to ensure their graduates’ employability and to work with employers to achieve this.

Supporters of the idea say that the levy would shift the financial burden away from students to companies, making it a fairer system of funding. At first glance, this approach looks appealing. Far too often graduates come straight out of university ill-prepared for the world of work and without the skills employers would like them to have. The introduction of a graduate levy has the potential to change this. As employers would be paying for the course fees they would likely have an increased role in developing and crafting higher education courses. This would mean that institutions would have an incentive to ensure their graduates’ employability and to work with employers to achieve this.

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However, this levy is not the silver bullet proponents claim. Rather than reduce the financial strain currently facing students, a graduate levy could instead increase that strain – especially for students from disadvantaged backgrounds. Under the current system, students experience a high level of student fees, but the combination of a minimum repayment threshold and income contingent repayment schedules mean it is arguably sustainable for students who earn the “graduate premium”. One of the inevitabilities of a graduate levy is that it seems likely companies would reduce a graduates’ salary in order to pay for the levy. Thus, the cost of education would still sit with students, albeit at a different time.

This would not be a problem for wealthier students whose families can support them throughout their early years of employment on a reduced graduate salary, but it would be an issue for poorer students whose families would not be able to support them financially through years of a lower income.

The levy could also lead to an even stronger bias from employers towards graduates from Oxbridge and Russell Group universities. Many employers believe that these institutions, dominated by the middle and upper classes, produce more reliable graduates compared to plate glass universities. While this scheme would abolish fees, in a system where HE is vertically differentiated, it could lead to graduates from a more modest background struggling to find employment and those that do, would most likely be receiving a lower salary than they receive today.


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So a graduate levy is not the remedy to improve social mobility in the higher education system. In truth, the issues are more complex than matters of funding. Beyond the cost of tuition fees, it is the cost of living when at university that puts off many underprivileged students from attending higher education. Means-tested grants are needed in order to make it easier for pupils from a lower-class background to attend university. Universities also need to pay close attention to how many of their students are working to support themselves during study and find meaningful ways to integrate that work with their academic study to both recognise the challenges many students face in finding the time to juggle work and study and to again recognise that employers want university graduates who are “work ready”. By integrating work and learning, universities could help facilitate this.

While the graduate levy would incentivise universities to ensure their graduates’ employability, there are other ways to do this – and indeed, this should be and usually is already a core goal for HEIs. Universities should invite non-academics with industry experience into universities to teach and to share their experiences of the world of work. This would go some way to providing students with the employability skills that industries are crying out for. HEIs should also continue to look for ways to integrate work and learning, such as placement opportunities.

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While proposals like the graduate levy should be welcomed – it is refreshing to see the debate around higher education funding shift from a binary debate between higher and lower tuition fees to a one where more unconventional approaches are being discussed – I do not believe that a graduate levy would be the right approach. Ultimately, it would deepen issues of social mobility rather than solve them.

Dr Elizabeth Miller is Business Management Degrees Programme Leader at Pearson College London, the first higher education institution in the UK to be founded by a FTSE 100 company – Pearson Plc.

Why a Graduate Levy is not a viable way to improve social mobility in universities
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