A Comprehensive Analysis of Funding Higher Education in the UK

This report provides an overview of higher education funding in the UK, focusing on the financial challenges faced by students and the various support systems available. It explores different funding options, including student loans and graduate tax, analyzing their advantages and disadvantages. The report highlights the role of government policies, bank loans, and the impact of these financial instruments on students and universities. It discusses the specifics of student loans, detailing their benefits and drawbacks, and examines the concept of graduate tax as an alternative funding mechanism. The report also considers general taxes applicable to international students and the availability of direct funding. Ultimately, the report recommends lenient repayment plans for students, suggesting student loans as a more globally accepted and potentially beneficial option compared to graduate tax. The conclusion emphasizes the UK's appeal as a destination for higher education, the importance of quality education, and the role of funding in enabling students to pursue their academic goals.

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Funding higher education system

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Table of Contents
Introduction................................................................................................................................1
Various funding options.........................................................................................................1
Student loans.......................................................................................................................1
Graduate tax........................................................................................................................2
Recommendations......................................................................................................................3
Conclusion..................................................................................................................................3
References..................................................................................................................................4

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Introduction
Education is a key factor for upliftment in students life. To gain skills and better
opportunities a good university need to be selected. UK provides doors of opportunities for
students by offering them quality education. Pursing higher studies in UK is quite expensive,
thus it provides benefits of international studies by making various finical options available
(Douglas, Douglas, McClelland and Davies, 2015). It offers funding of higher education on
the behalf of students to promote excellence and innovation in knowledge. It promotes the
education by various charity controls and commission offering various funding options. This
helps in developing links between business and educational sector (Diamond, Evans, Sheen
and Birkin, 2015). UK provides outstanding education options and helps in experiencing new
principles and professional background. For affording the accessibilities of these services
extra funding strategies are launched; including various scholarships, awards, loans and
finical fellowships for students(Bolton, 2017). Various banks nowadays offer very low
interest rates and flexible schemes which make students easier to repay the loans. Banks like
HSBC, Lloyds Banking Group and Royal Bank of Scotland Group provides loans to students
for higher studies.
Various funding options
In reality individual have very little options to meet their goals due to lack of capital. These
options where designed to make sure that no student is denied for pursuing higher education.
Banks has also launched new educational loan schemes to fulfil the demand of higher studies.
Thus for filling the gap between willingness of studying and lack of money various funding
options are made available in UK:
Student loans- There are various students’ loans available to purse higher studies in top
universities. As for a student who has just come to UK to purse higher studies, the living cost

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as well as tuition fee would be very high(Lochner and Monge, 2016). Due to availability of
student’s loan , helps students to avoid the financial problem and avoid the stress of paying
fee. These education and student loan can be considered as investment. Just by spending few
lakhs with the interest rate of approx. 0.5%, with a longer period for repayment.
Governments of UK have offered many bank benefits by low interest subsidy for
students who are suffering from weaker financial support. These policies impact universities
sustainability as the income of a university depend on the admissions. Government policies
support student funding which is beneficial for universities also(Szelényi, 2010).
Advantages
It helps the students who have the capability to study due don’t have enough funds to
purse higher education. Students loan need not to be repaid immediately, this can be
repaid in instalments so that it doesn’t create burden on the student. Student loans have
generally low interest rate as compared to other loans. Students don’t have to deal with
security issues while applying for this loan (Szelényi, 2010).
Disadvantages
It is true that it has low interest rate, but if student don’t get job after completion of
degree, paying interest rate is difficult (Frank, 2017). Thus, due to the focus on repaying
the loan with interest, leads to stress rather than focusing on career. Additionally these
loans can last for a longer time after completing their education(Frank, 2017). Even after
working, saving is not possible due to repayment of student loans.
Graduate tax
UK government aimed to provide higher education to more children especially who
belong to less privileged backgrounds in the hope that they achieve better growth. Thus

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government suggested the idea of graduate tax which is supplementary of income tax. This
tax need to be paid by all the graduates’, in place of paying income tax(Pogge and Mehta,
2016). Government have supported: Firstly, students from low income family background
who are willing to access higher education. Secondly, it has provided better educated
workforce in the society. Graduate tax has resolved the concern of paying university fees.
Graduate tax has various characteristics as it delivers free education to the student initially, so
that students can purse higher education(Green budget,2018).
Advantages
Graduate tax is beneficial as it helps student completing their graduation without
thinking of tuition fees. It also reduces tax burden for students and permit graduates to pay
the interest in any phase of their working life (BBC, 2018).
Disadvantages
It is difficult for the students who have travelled overseas for higher studies, as they
need to follow UK tax system to pay the tax. It also raises the tax payment by everyone in the
country due to neglecting taxes by graduates. Thus, It breaks the links between the actual cost
of education and the cost paid by student after graduation (BBC, 2018). There is a problem
of trust with students that are leaving UK and are not paying tax.
General tax- There are some general tax that need to be paid by the students who come to
the UK to study. Government ensures that international students who came to UK need to pay
only certain amount of ta. Only nominal amount of tax need, that to on certain goods other
taxes are exempted.
Other than that UK has direct funding council in which funds are set for every year
and selected students are able to access it. Students’ loans are also of two types- fee loan or

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maintenance loan. Apart from that various universities are funding for themselves (Bryson,
2016).
Recommendations
There are several funding methods provided to the students for accessing higher
education. Whenever student’s think about pursing their higher education from a good
university, there is always a problem regarding the financial aid. Government have offered
various funding ideas for supporting the students to purse their higher studies(Altbach, P.,
2015). Some of the forms of funding are getting scholarships or federal grants that do not
require repayment. But all the students can’t grasp the opportunity of studying with the help
of scholarships thus funding is required. Borrowing money for college loans is not a good
option as they have very high interest rate. Thus it is recommended, to follow lenient
repayment plans so that they are easily affordable for students. In comparison of using
student loan or graduate tax it is better to use student loan as it is followed in almost all
countries, so for the students who are not from UK can repay the tax from their
countries(Douglas, Douglas, McClelland and Davies, 2015). As well as it has every lower
interest rate this can be paid in a longer time period.
Also UK have, higher education innovative fund plan which supports wide range of
student’s by offering them economic and social benefit.
Conclusion
UK is considered as a popular destination for students for pursing higher studies. As
thee are top universities of world in UK like Oxford University or University of Cambridge.
UK provides quality education to students, by ensuring that higher education standards are
fulfilled. Thus every student dream of pursing their higher education from such reputed

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universities. But due to lack of finical status they take a back step, but now various policies
have been launched. So that students do not sacrifice their vision to attain heights in career.
Students now focuses on long term goals instead of worrying about short term finical crises,
due to availability of various loans and funding system.

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References
Altbach, P., 2015. Perspectives on internationalizing higher education. International Higher
Education, pp-245-78.
BBC, 2018 Tuition fees and graduate tax: What's the difference? [Online]. Available at
http://www.bbc.com/news/uk-politics-11946585, [Accessed on 8 March’18]
Bolton, P., 2017. House of Commons Library: Briefing paper: Number 7393, 14 June 2017:
Higher education funding in England.
Bryson, C., 2016. Engagement through partnership: Students as partners in learning and
teaching in higher education.,pp-34-90
Diamond, A., Evans, J., Sheen, J. and Birkin, G., 2015. UK review of information about
higher education: information mapping study: report to the UK higher education funding
bodies.
Douglas, J.A., Douglas, A., McClelland, R.J. and Davies, J., 2015. Understanding student
satisfaction and dissatisfaction: an interpretive study in the UK higher education
context. Studies in Higher Education, 40(2), pp.329-349.
Frank, 2017, The Advantages and Disadvantages of Student Loan [Online]. Available at
https://withfrank.org/how-to-pay-for-college/how-do-i-manage-my-loans/paying-your-loans/
the-advantages-and-disadvantages-of-student-loan-repayment-plans/, Accessed on 9
March’18
Green budget,2018, A graduate tax for the UK? [Online]. Available at [Accessed on 9
March’18]

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Lochner, L. and Monge-Naranjo, A., 2016. Student loans and repayment: Theory, evidence,
and policy. In Handbook of the Economics of Education [Vol. 5, pp. 397-478] Elsevier.
Pogge, T. and Mehta, K. eds., 2016. Global tax fairness. Oxford University Press.
Szelényi, K., 2010. Students without borders? Migratory decision-making among
international graduate students in the US. Knowledge, Technology & Policy, 19(3), pp.64-86.