Down and out on $2.75 billion a year

Down and out on $2.75 billion a year

The government should resist student calls to introduce a living allowance for all students, according to Education Forum policy advisor Norman LaRocque.

Commenting on the New Zealand University Students' Association (NZUSA) demand for a universal living allowance for students to ease what it called a growing debt burden, Mr LaRocque said there was no justification for such an allowance.

Data compiled by the Treasury in the late 1990s showed that, relative to countries such as Canada and the United States, New Zealand's student allowance policy was generous. It also showed that countries were moving away from allowances toward student loans as the preferred method of supporting tertiary students, he said.

"The student union claim that the loan scheme is 'harsh and unfair' is pure rubbish - nonsense upon stilts," said Mr LaRocque.

"The New Zealand loan scheme is already one of the world's most generous, offering assistance to cover fees, living costs, books and student union fees. It also offers repayments tied to income, interest write-offs while students are studying, interest write-offs when graduates' income is low and a subsidised interest rate.

"No other group - whether farmers, small business owners or homeowners - enjoys the generous terms and conditions provided by the student loan scheme. They have to make their own investments in their future. And tertiary students typically come from better off family backgrounds and on average earn higher incomes later in life."

The call for a universal student allowance should be seen for what it is - a bald-faced attempt by the NZUSA to get taxpayers, including many less-advantaged ones, to foot an even bigger proportion of the tertiary education bill. There is little justification for the current level of spending on tertiary education ($2.75 billion annually), let alone an increase in that amount, said Mr LaRocque.

"The focus on student loan debt is pure hype by the NZUSA. The $6 billion in loan debt outstanding is but a fraction of the amount of mortgage and other debt outstanding. Further, the growth in loan debt has been compounded by recent government policy changes such as the write-off of loan interest while students are studying. According to the government's own figures, these changes will increase the amount of loan debt outstanding by one-third by 2020."

If the NZUSA is serious about the growing debt burden, it should lobby the government to eliminate the write-off of interest while studying provision and ask the government to investigate targeting the living cost component of the loan scheme, Mr LaRocque said.

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