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Students' fears confirmed in 2012 Budget

24 May 2012

Students' fears confirmed in 2012 Budget

Students’ fears were confirmed in the National Government’s 2012 Budget, announced today. The Government announced the following changes:

1. Freezing the parental income threshold for student allowances until 2016; and
2. Removing long-programme exemptions to the 200-week student allowance from 2013; and
3. Removing postgraduate eligibility for the student allowance; and
4. An increase in the student loan repayment rate from 10% to 12%.

Hundreds of students are currently expressing their frustration at a peaceful rally, blockading Symonds Street at the University of Auckland.

Parental income threshold
For those under 24, eligibility for student allowances is extremely restrictive. To be eligible for the full student allowance, students must come from a family with a combined income of less than approximately $55,000. “Student allowances are already reserved only for those from the most challenging of financial backgrounds” said Sam Bookman, Education Vice-President at Auckland University Students’ Association (AUSA). “Restricting the eligibility further will only shut out more students from low-income backgrounds, the exact kind of students who need a tertiary qualification for social mobility.”

Currently, students are financially struggling. The Graduate Longitudinal Study (GLSNZ) suggests that around 13% of students are in dire financial need. The 2012 Budget, in real terms, will remove some students from eligibility from the student allowance, and reduce the allowance received for others.

Removing long programme exemptions
Currently, students who take long courses that require more than 200-weeks to complete, such as medicine and optometry, are granted an exemption to the 200-week allowance limit. This ensures that students from low-income backgrounds are able to complete these prestigious degrees.

With this exemption gone, students now face the choice of either borrowing money once the 200-week limit expires, or having to work alongside these challenging degrees, thereby jeopardising their grade.

There is also strong concern that the move will disincentivise students from low-income backgrounds, especially those in Maori and Pacific communities, from pursuing long-term programmes. Pania Newton, Co-President of Nga Tauira Maori who is studying toward a six year degree, raised concern about the effect on such communities - "It's unfair to tell these students that they should be entering long-term tertiary education to do better for their families and communities, but not providing the support required to get them there."

Removing access to allowances for postgraduate degrees
The 2012 Budget will remove access to the student allowance for those in postgraduate study. This runs counter to the Government’s strategy of developing New Zealand’s knowledge economy.

“More students will have to forego the option of postgraduate study” said Bookman. “Not only does this mean that less highly-skilled graduates are entering the economy, but those who do are those who can afford to finance their study. Postgraduate qualifications are a key to higher earnings. Removing allowance support for such qualifications effectively bars students who cannot afford that study from contributing to the economy in the future, and achieving social mobility through higher wages”.

Further, students are expressing concern at the effect this announcement will have on female postgraduate students. “Many female postgraduates are studying postgraduate courses while supporting a young family” Bookman said. “By making it more difficult to fund that study, fewer of these mothers are likely to enter postgraduate study. We’ve already seen attacks on parent students through the removal of the Training Incentive Allowance; this will only further harm them.”

Pre-budget announcements have predicted that the student allowance cuts will affect approximately 5000 students.

Increase in the student loan repayment rate
The student loan repayment rate is set to increase from 10% to 12%. "This seems like a small increase, but it hits recent graduates hard, at a time in their lives when they're not earning much and are trying to get on to the first rungs of a tough New Zealand career ladder." said AUSA President, Arena Williams.

Recent studies, such as the Graduate Longitudinal Survey, have demonstrated how low graduate wages are Adding a further 2% increase to the repayment rate will further lower take-home pay.

"In order for students to earn a wage that will allow them to pay off their student loan and save for their future, they are bound to look offshore." noted Bookman. Last month, a record number of 4,500 New Zealanders left for Australia. "Graduates will continue to flee, as they feel more and more disenfranchised in a system which doesn't value them."


Students at the University of Auckland are still expressing their outrage. The protest began at 1pm with several hundred students assembling outside the General Library. They then marched to the intersection of Symonds and Alfred Streets at 1:30pm, where they listened to bands and speakers.

While AUSA has not organised today’s protest, it endorses the aims of the students involved.

Today’s budget follows recent budgets which have targeted students who are single parents, recent migrants or in long-term study.


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