Student allowance cuts – making a bad policy even worse

Postgrads, if you thought you were ok for student allowance next year because your course already started, think again…

At the time of the Budget in May, Tertiary Education Minister Steven Joyce announced that postgraduate students would no longer be eligible for a student allowance.

In itself, this policy is short-sighted, flies in the face of Government plans to rein in student debt and will further impact on diversity as the prospect of taking on more debt will limit those approaching postgraduate study.

What’s now become clear, and makes this bad policy even worse, is that many students who had thought they were exempted from this cut are now realising that they are no longer eligible as well.

Have a look at the TV3 story on this from the weekend.

These are students who are part-way through postgraduate qualifications (e.g. have completed one year of a two year Masters course) and are now looking to re-apply for their allowance for next year.

The reason that they thought they were exempt was because of misleading statements like the one below from Steven Joyce from back in May:

“students who apply for student allowances in 2013 for an enrolment period that started in 2012 will not be affected”.

Instead, these students are now being told by Studylink that they are not eligible for an allowance to complete their study. While there is the option to increase their student loan by borrowing living costs, this is about $70 a week less than what is available through the student allowance.

As well as the disincentive of further adding to their debt, for many of these students they will be unable to survive on living costs alone, yet do not have the time to work as well as complete their course of study.

This is leaving many of these students with little option other than to drop out.

What is most frustrating is that many of the students affected by this policy are those studying towards qualifications that are specified on the list of skills shortage in New Zealand so there should be every incentive there for our young people to be exploring these fields of study.

For example, we have an ‘absolute skill shortage’ of Clinical Psychologists and it’s the sort of qualification where a postgraduate qualification is required. It’s also the sort of qualification where you’re required to work full-time four days a week as an intern (generally unpaid), attend one full day of class each week and then also complete assignments, exams, etc., so there is little time to take on any extra paid work to supplement the living costs.

This really does show the illogical nature of this policy.

19 thoughts on “Student allowance cuts – making a bad policy even worse

  1. From memory I cited a piece by a clinical psychology student in one of my essays for social policy who basically said if it was a choice between borrowing $200 a week and getting $150 free she’d borrow every time. It’s not about getting money for free, it’s about having enough to live on! It is simply not feasible for most post grads to work while studying. The only way they could do it would be to severely cut into their sleep, which science is starting to discover causes all kinds of long term problems (eg memory, emotional state, concentration) and which would cause their study to suffer badly because they simply couldn’t function. Students who are just starting university now at least could get a job and save their income for the post grad years, but those who are already post grads have had no warning or time to prepare. It makes no sense as a policy unless you simply don’t want low/medium income students to get higher qualifications unless they’re one of the few lucky enough to get a scholarship or paid internship.

    Like or Dislike: Thumb up 4 Thumb down 1 (+3)

  2. Because I knew that students were only eligible for the allowance for a couple of years, I decided that I should be responsible and plan the best time to use it: I worked throughout undergrad expecting that this time investment would pay off when I progressed to more intensive study and still hoped to be able to pay for little luxuries like rent and food.

    (Coincidentally, I was hoping to complete the PGDip in Clinical Psychology. Good thing there’s no skills short– oh.)

    I’m aware I can take on more debt, but the $150/wk living costs available would *not* cover essentials. In fact, I challenge John Key or Steven Joyce to live on $150 a week for two years, bearing in mind that he would of course be expected to pay it back afterwards.

    In the meantime, I’ll just contemplate my hard-earned BSc, which I believe makes me eminently qualified to stack shelves at New World.

    Like or Dislike: Thumb up 5 Thumb down 1 (+4)

  3. wouldn’t it be nice if Labour categorically said that it would reintroduce the student allowance for postgrad students immediately after it becomes the Govt. Then people could, for example, become teachers without borrowing to live if they don’t have a job.

    Like or Dislike: Thumb up 5 Thumb down 1 (+4)

  4. The whole scheme was a mess to begin with. First it made the assumption that students are financially independent until they are 25 whilst the ‘adult’ age for just about everything else is 18. Those with wealthy family or poor family have support – those in the middle have none and have to borrow living costs.

    Given anyone can borrow living costs what is the point in assessing against parental income? Coming from a poorer background hardly restricts your access to education – we don’t means test loans. And if they don’t expect to get the income after their qualification – what is the point again?

    Either everyone should receive it or no-one. If we expect parents to support them, why isn’t the benefit means tested against parents until we’re 25? Consistency would be nice.

    Like or Dislike: Thumb up 7 Thumb down 1 (+6)

  5. I assume this change will shift a lot of the burden for living costs on to the student loan system. As Hemihua said the allowance is already means-tested against a students parents’ income rather than the student, until they are 25. This change is probably to stop over 25’s (who are likely to be in postgraduate study) from accessing the student allowance funding.

    What the student loan policy really does is create a special tax for educated young people that subsidises the running costs of public universities. It’s not surprising that young adults today are putting off buying a car, a house, and even saving for retirement. Their income is going to pay off a loan taken out before they even started working.

    Like or Dislike: Thumb up 5 Thumb down 1 (+4)

  6. In my experience WINZ do everything possible to avoid putting teenagers out of work on the dole. Most of them end up living off family and friends anyway.

    Time for a
    Universal income.

    Like or Dislike: Thumb up 5 Thumb down 4 (+1)

  7. The whole idea of “term limits” on the student allowance is contrary with Joyce’s stated goal of improved outcomes. The improved outcome only occurs if post graduate study is completed. It can only be completed if students can afford to study on the living cost component (given that the amount is significantly lower than the student allowance)- if they cannot they may no longer choose to study at all. Given an under graduate degree may confer little economic benefit.

    Effectively we are seeing an affordability barrier being placed before students from families that cannot afford to support them.

    Alternative policy options are

    1. all post graduate students can borrow living costs at the student allowance rate

    2. students formerly able to get the student allowance can borrow at the student allowance level.

    3. allow a higher living cost claim or allowance in areas of post graduate study where the govenment wants more graduates.

    Like or Dislike: Thumb up 1 Thumb down 1 (0)

  8. Personally I believe that tertiary, and post graduate, education should be free BUT only to those who qualify for the investment. I advocate that if, useing old terms as I’m not eu-fait with the current marking system, a student who received a “A” bursary in 7th form wished to study at undergraduate level, they should receive a free education, free books, and free living allowance (based on where they are accepted to study as local COLAs should be determined). If, (again terms I understand) they get a 1st in their undergraduate degree, we should continue to fund their education through Masters level. Anyone who could demonstrate the aptitude, ability and interest in a two year PhD, and has a Masters in the top decile of all masters in their graduating year should also have their education funded. THese are truly the academic talent that we should be encouraging. Anyone who dropped out, at any level prior to being admitted to their degree, should have the cost of their study, to the end of the year in which they drop, charged to them as a loan at normal banking overdraft rates.

    For the others wanting to do an undergraduate degree, I would offer a loan system, with interest, that allowed write-off of the principal in the event they received a 1 or 2.1 grade degree, thus proving they were worth the investment.

    Like or Dislike: Thumb up 1 Thumb down 1 (0)

  9. SPC “It’s all part of a cut in funding for tertiary educaton.”

    Tertiary funding 2007 – $3.322 billion
    Tertiary funding 2012 – $3.933 billion ($600 million more)
    Tertiary funding 2013 – $4.215 billion budgeted ($900 million more).

    Like or Dislike: Thumb up 1 Thumb down 0 (+1)

  10. The tertiary funding figures above do not include tertiary debt cost or student allowance – no longer available for post graduate students.

    The government has taken measures to reduce both at the expense of students and graduates.

    I am sure you know what a real value means – so don’t try and con anyone that a higher dollar figure is the increase you say it is.

    The next factor is funding per student in study, tertiary funding is related to student numbers. Is this up or down in real terms?

    Like or Dislike: Thumb up 0 Thumb down 1 (-1)

  11. SPC says “The tertiary funding figures above do not include tertiary debt cost or student allowance ”

    Wrong again.

    They include student loans and student allowances of
    – $1021 million in 2007
    – $1168 million in 2012
    – $1363 million in 2013 (budgeted)

    Just shows you’ll make up complete nonsense to back your preconceived ideas.

    There’s been an increase by over $2000 million for education spending under the current govt, and the Greens try to con people that we’re spending less than before. It plain dishonesty.

    Total Education spending
    2007 – $9269 million
    2008 – $9551 million
    2012 – $11,883 million
    2013 – $12,387 million (budgeted)

    Like or Dislike: Thumb up 1 Thumb down 1 (0)

  12. I see you want to ignore two things.

    The difference btween nominal and real dollar numbers of funding and funding per student.

    To hide the fact that real funding is down per student on a real value basis?

    Like or Dislike: Thumb up 1 Thumb down 1 (0)

  13. Last week’s Budget delivered a slight decrease in funding for tertiary education, down from $4 billion last year to $3.9 billion this year. Treasury forecasts that funding will continue to remain below 2009 levels ($4.5 billion) through until at least 2016, while student numbers will continue to remain higher than 2009 levels.

    The Budget contained no new funding to match inflation (education inflation for the last year was 3.6 percent) or match the on-going growth in student numbers, or to match the increasing performance demands on the sector (‘outputs’ for both student achievement and research)

    http://teu.ac.nz/2012/05/tertiary-educations-sub-zero-budget/

    Despite record numbers of students in tertiary education this year the government has yet again cut funding.

    Since this government came to office, student numbers have grown by 5,000 but government tertiary education funding has fallen by $500 million. Today’s Budget has cut funding even further.

    TEU’s national president Dr Sandra Grey says tertiary education can, if well-funded, move people into new jobs to help New Zealand’s economy recover.

    Overall tertiary education expenditure for 2012 is forecast to be $60 million less than 2011. Treasury forecasts that government funding will remain below 2009 levels right through until 2016.

    http://teu.ac.nz/2012/05/further-cuts-for-tertiary-education/

    Like or Dislike: Thumb up 0 Thumb down 1 (-1)

  14. SPC say “To hide the fact that real funding is down per student on a real value basis?”

    2013 tertiary funding will be 27% higher for 7% more students over 2007.

    It’s really really dumb to attack the government on reduced education spending, when total education spending has increased by $2600 million since 2007 (around 28%) – even with a financial crisis.

    It just makes you look dishonest.

    In fact total government spending has gone up 27% from $54 billion to $69 billion from 07-12. So if you are going to attack for cutting spending, you’re either going to have to tell lies, or hunt very hard for specific small cuts in niche areas.

    (health spending has gone up $4000 million, law and order up $800 million, heritage, culture and recreation up $1200 million, education up $2600 million etc.)

    Like or Dislike: Thumb up 1 Thumb down 0 (+1)

  15. No links for the figures you use?

    Last week’s Budget delivered a slight decrease in funding for tertiary education, down from $4 billion last year to $3.9 billion this year. Treasury forecasts that funding will continue to remain below 2009 levels ($4.5 billion) through until at least 2016, while student numbers will continue to remain higher than 2009 levels.

    The Budget contained no new funding to match inflation (education inflation for the last year was 3.6 percent) or match the on-going growth in student numbers, or to match the increasing performance demands on the sector (‘outputs’ for both student achievement and research)

    http://teu.ac.nz/2012/05/tertiary-educations-sub-zero-budget/

    Like or Dislike: Thumb up 0 Thumb down 2 (-2)

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