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NZ university fees now one third lower than Aus.

9 March 2005 Media Statement

NZ university fees now one third lower than Australia

New Zealand university fees are now more than one third lower than the fees charged to students at universities in Australia, Education Minister Trevor Mallard said today.

"The Labour-led government is committed to making tertiary education more accessible and affordable for all New Zealanders, and the signs are that our policies are working well to tackle this issue, as the cost of tertiary education declines," Trevor Mallard said.

"The information released today shows university fees in New Zealand are now much lower than university fees in Australia.

"The gap in the fee levels in Australia and New Zealand has increased as fees have fallen in New Zealand. In 2001, average fees in Australia were 22 percent higher than in New Zealand but by 2003, once our fee stabilisation policy had taken effect, the gap had risen to 33 percent.

"Between 2001 and 2003, New Zealand university tuition fees decreased by 3.0 percent, from $3,852 to $3,736. This compares with the average fee charged to Australian students, which increased by 6.0 percent from $4,711 to $4,994.

"The government is also investing around $223 million over the next four years to extend access to the Student Allowances Scheme. This is designed to benefit an extra 36,000 students, including 12,000 who will now be eligible for a full allowance. This increased access to student allowances is expected to reduce the amount of Student Loan Scheme debt by nearly $20 million per year.

"That's on top of other government moves to make tertiary education more affordable - such as the fee maxima policy mentioned above, that has helped stabilise fees, and the fact that students are no longer charged interest on their loans while studying," Trevor Mallard said.

Trevor Mallard yesterday released two new reports that showed reduced loan repayment times and a decrease in the growth rate of student debt. The reports showed that 40 percent of borrowers had completely repaid their debt within six years of leaving study, and a further 10 percent had repaid three quarters of their debt.

The reports also revealed that those who leave study with higher debt earn higher incomes and repay their loans much more quickly, in particular those who study medicine, nursing and engineering.

The fact sheet outlining the Australia versus New Zealand university fees comparison is attached.

Australian University Tuition Fees Compared with New Zealand University Tuition Fees

Australia New Zealand Fee Comparison

Figure 1 compares the ratio of the fees charged in 2003 in the various subject disciplines of New Zealand universities, with similar programmes in Australia under the HECS .

Figure 1: Ratio of tuition fees in New Zealand universities to Australian HECS rates in 2003

AUT Auckland Waikato Massey Victoria Canterbury Lincoln Otago

Arts/Humanities 0.79 0.84 0.90 0.78 0.75 0.86 0.76 0.74

Education 0.79 0.84 0.90

Nursing 0.96 0.92 0.94

Maths 0.55 0.59 0.69 0.68

Computing 0.55 0.67 0.69 0.65 0.61 0.68 0.66

Health 0.55 0.67

Agriculture 0.65 0.68

Science 0.55 0.67 0.69 0.62 0.66 0.71 0.67 0.65

Engineering 0.78 0.69 0.68 0.75

Commerce 0.55 0.67 0.63 0.55 0.61 0.64 0.53 0.52

Law 0.58 0.56 0.52 0.55 0.52

Medicine 1.44 1.37

Dentistry 1.37

Veterinary 0.97

Notes:

1. Australian HECS rates were converted to New Zealand dollars for comparative purposes. Exchange rate $1NZ =$0.9181Aus in March 2003.

2. New Zealand fees are GST inclusive.

Source: New Zealand Vice Chancellors' Committee, Fees for domestic students 2003, DEST Higher Education: Report for 2003 to 2005 triennium.

- In most subject areas, New Zealand universities charge a lower fee than in Australia. Disciplines such as law, science, mathematics, computing, agriculture and commerce have significantly lower fees than in Australia. The only exceptions to the trend are medicine and dentistry where the New Zealand fees are up to 1.44 times greater than in Australia.

- A comparison of nominal domestic per EFTS fees charged in New Zealand universities with those charged in Australian higher education shows that, not only are Australian tuition fees higher than in New Zealand, but the gap in the average fee has been widening since 2001.

- This is a result of the impact of fee stabilisation in New Zealand over this period, along with steady increases in the Australian HECS rates. Between 2001 and 2003, New Zealand university per EFTS tuition fees decreased by 3.0 percent, from $3,852 to $3,736 . This compares with the average per EFTSU fee charged to Australian students under the HECS, which increased by 6.0 percent from $4,711 to $4,994 .

Figure 2: Average New Zealand domestic student tuition fees per EFTS in universities and average Australian HECS per EFTSU 1999-2003

Notes:

1. The New Zealand fees are GST inclusive.

2. Australian HECS data has been converted to New Zealand dollars for comparison purposes. Exchange rate $1NZ =$0.9181Aus in March 2003.

Source: DEST Higher Education: Report for 2003 to 2005 triennium.

The Structure of Fee Charging in Australia

- In Australia, student fees are charged in universities through the Higher Education Contribution Scheme (HECS).

- Under the HECS, students are charged a fee for undertaking study with the option of deferring this payment if they cannot pay the fees upfront . If students pay upfront they receive a discount of 25 percent on their HECS contribution. A partial payment attracts a discount of 25 percent on the amount paid. People who are unable to make any upfront payments face the full contribution. Any deferred fees constitute a debt that is recovered through the tax system, like student loan debt in New Zealand.

- Since 1997, there have been three levels of HECS fee set by the Australian federal government for different subject disciplines . Fields of study are assigned to fee bands by a mix of factors that take account both of cost and of the expected earnings of graduates in the field.

- Thus, the highest fee band includes one low cost discipline (law) and three high cost, high earnings fields (medicine, veterinary science and dentistry). By contrast, a high cost field with low earnings potential (agriculture) is assigned to the medium band.

- From 2005, the HECS rates will rise - by between 2 and 3 percent. The universities will no longer be required to charge the HECS fee, however. From 2005, universities will be free to set their own fees, provided the fee is no more than 125 percent of the HECS rate . If a university sets a fee above the HECS rate, then the student may not borrow more than the HECS limit through the HECS scheme; the margin above the HECS rate must be paid upfront.

- The new structure means that, for the first time, different Australian universities will have different fees. Universities could increase their fees by 27 - 28 percent in 2005. It is also possible that some Australian universities will charge lower fees in 2005 than in 2004.

ENDS


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