by Holly Walker
Since last month’s Budget, I’ve been trying to get to the bottom of what the changes to student loans and allowances will mean in practice, especially for postgraduate students who were previously eligible for the allowance and now won’t be.
I asked Tertiary Education Minister Steven Joyce some questions in the House in which he claimed that these students would simply be able to borrow living costs as part of their student loan, and that this would be practically the same amount as they get on the allowance and should be plenty to allow them to meet their basic costs.
Now, putting to one side for a moment the fact that this will mean that personal and total student loan debt will balloon, in direct contravention to some of the Government’s other stated aims about reducing student debt, a very practical question remains for these students: will they still have the same amount to live off each week?
The maximum you can borrow for living costs is $172.50 per week, but the maximum a single student over 24 can get from the student allowance, including the accommodation benefit that is automatically added, is $244.96 per week. That leaves a shortfall of about $70 a week.
That might not sound like much to John Key and Steven Joyce, but it means a lot if it’s your whole food budget. It seems pretty important to know whether postgrad students will still be able to access this much per week, even if they do need to borrow it. For evidence, see this great open letter to John Key from a clinical psychology student about exactly what these changes could mean for students like her.
Steven Joyce’s replies in Parliament implied that everyone who is currently eligible for a student allowance with its automatic accommodation benefit top-up will now be eligible for the regular accommodation supplement in addition to the living costs part of the student loan. But my understanding, and the stories I have heard from affected students, is that the two are assessed quite differently. As I understand it, there is no guarantee that you will be eligible for the accommodation supplement just because you were previously eligible for the student allowance, nor that you will be able to claim the same amount.
So I’m trying to figure out from the Minister exactly how this is going to apply in practice: not easy! What I have discovered, by means of a written question, is that the figures in the Budget were calculated on the assumption that affected students would access the accommodation supplement at the same rate that they currently access the accommodation benefit:
Question: What assumptions about numbers of students accessing the accommodation supplement were used to calculate the new spending on Accommodation Assistance related to Removing Student Allowance Eligibility for Postgraduate Study and Long Programmes, as detailed on page 76 of the Information Supporting the Estimates in Vote Social Development for Budget 2012?
Answer Text: The calculation for the accommodation supplement take-up for students affected by this change assumed that this group would access the accommodation supplement at the same rate as they currently access the accommodation benefit.
So the Government has assumed that everyone affected will be able to access the accommodation supplement on top of the living costs payment.
The real question is, is this a realistic assumption? Are the criteria the same for the two different types of accommodation assistance? Will the same number of students actually be able to access the accommodation supplement?
Every question I’ve asked along these lines comes back with the same answer: “This will depend on the student’s individual circumstances and actual living costs.” Well yes, obviously. But presumably some modelling has been done to assess how students currently eligible for the allowance will be affected by the change en masse.
It seems strange to me that for the purposes of budgeting the Government is able to assume that everyone will be able to access the same assistance, but can’t confirm whether this is actually possible under the current criteria.
One group who I’m sure do know whether this is a realistic assumption are those facing the loss of their student allowance!
If you are potentially affected, or have experience of switching from the student allowance + accommodation benefit to living costs + the accommodation supplement, let me know! I’d love to hear how it worked and whether you were able to access the same level of assistance. I trust that your replies will be more helpful than the Minister’s.
Published in Economy, Work, & Welfare | Parliament by Holly Walker on Mon, June 18th, 2012
Tags: accommodation benefit, accommodation supplement, Holly Walker, living costs, postgraduate students, steven joyce, Student Allowances, student loans, tertiary education
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Meanwhile I’ve been trying to figure out exactly what the changes mean for disabled students. If you’re disabled and unable to study full time you can get limited full-time status, which means you get the same benefits as a full time student while only studying part time – this includes borrowing for course related costs and getting a student allowance. However with the 200 week cap, if you’re studying a half load this means you can no longer get a bachelors degree before your student allowance runs out. An OIA request reveals that the Ministry of Education has no documentation whatsoever on how this might affect disabled students, and the Ministry of Social Development says that affected students can apply for an exemption for “special circumstances”, which are considered on a case by case basis. (I’ve done another OIA request to find out what the process is for considering applications.) They also have no idea how many people this affects as they don’t track how many people have limited full time status due to disability.
Since people with disabilities tend to have higher costs than others it’s even less feasible for them (/us) to get by on the student loan living costs, and many of the WINZ benefits and supplements aren’t accessible to students. Considering they keep trying to push people off the sickness and invalids benefits into work, you’d think being able to get qualifications would be a good thing.
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The maximum you can borrow for living costs is $172.50 per week, but the maximum a single student over 24 can get from the student allowance, including the accommodation benefit that is automatically added, is $244.96 per week. That leaves a shortfall of about $70 a week.
I haven’t kept up to date with rules on loans and allowances for the last few years, but everything I’ve seen to date seems to presume that those with allowances must be living off them entirely without loans, and thereby assuming that the only people likely to have serious problems (according to the government’s answers) are those whose allowances were higher than the maximum loan they can draw.
I’m on a tangent here, but is there a count of how many postgrads already need to combine their allowances with existing regular drawing of loans to make up living costs, and so could have additional problems with borrowing more to make up for the loss of allowance?
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Tangental, but here’s my student loan sob story…..
Postgrad costs me bout 8k a year. I can get a loan no problem.
However, as I earn a decent salary, I’m paying it back @ about $650 per month even though I am the sole breadwinner, have a decent mortgage and 2 kids.
Begged the IRD to cut me some slack to no avail.
Effectively, I’m compelled to pay it back in full within 1 year for each year of study and paying 6% interest as it’s garnished from my pre-tax salary, therefore gets lumped onto my revolving credit which is slowly increasing in size because of my repayments schedule!
I’m now having to toss up whether I can afford to continue my education that, in the end, will make me a higher yield taxpayer.
Has anyone else faced a similar scenario or do I just have the perfect storm of crappiness?
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thereby assuming that the only people likely to have serious problems (according to the government’s answers) are those whose allowances were higher than the maximum loan they can draw.
Yes… you’re right. If the amount of money people have to live on drops, the people who have problems are those whose costs are higher. I thought that kind of went without saying?
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Mike M, I am fairly sure those receiving student allowance cannot borrow for living costs on the loan.
A pertinent question would be to ask whether anyone getting $244.96 on the student allowance would get this on living costs. And if so under what circumstances.
I suspect the answer is no one would get that much, as the base rate for living costs is lower than that for the allowance – thus regardless of the accomodation supplement top up the amount will be lower.
So is everyone will be worse off, how much so is the matter of individual circumstance. The information to draw out is what the range is – from living costs alone $72.46 to the smallest difference.
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I thought that kind of went without saying?
Yes but my point was that the arguments I’ve seen so far have largely focused on National saying “People can draw a loan for the same amount” and others then saying “but the loan limit is substantially lower than the allowance some people live on so that’s an impossible solution”. This is all good except it implies that the solution could be made “possible” merely by increasing the living costs cap on loans to match the previous limit on allowances. But that’s still not the case for anyone with existing high allowances who still needs to draw on extra loans to meet living costs.
All of this may be irrelevant, however, if @SPC’s explanation is correct that drawing on an allowance reduces the living costs loan entitlement, which would mean there’s nobody in such a circumstance.
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