We have no plans to assess the effect of introducing a graduate tax for repayment of financial support made to higher education students. A graduate tax was considered alongside variable and fixed fee options as part of the student finance review in 2002 and the White Paper ‘The future of higher education’ in 2003.
A number of disadvantages were identified including: the cost of a graduate tax (which is greater than variable fees and loans), the lack of any mechanism for early additional repayments and the slower rate of repayment of a graduate tax when compared with loans.
Government concluded that the Graduate Contribution Scheme based on variable fees of up to £3,000 set by higher education institutions presented the best option for both students and universities and this was subsequently enacted via the Higher Education Act in 2004.