Student allowance cuts to go ahead

KELSEY FLETCHER
Last updated 11:52 02/01/2013

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Cuts to student allowances will go ahead this year despite higher loan repayments and fewer students borrowing.

The cuts mean post-graduate students are no longer eligible for a government-funded weekly allowance and no exemptions will be made to undergraduates on long programmes, over 200 weeks.  

The repayment rate for all students has also increased from 10 to 12 per cent.

The Government announced the student loan scheme changes in its Budget last year amid outcry and student protests.

However, statistics released by the Education Ministry for 2011/2012 show the total number of student loan borrowers has declined since 2010.

In 2011 there were 207, 330 students with a loan, a decrease of 2.4 per cent which the ministry attributes to the recession.

But in 2012 $876.5 million was received in loan repayments by Inland Revenue and the Ministry of Social Development, $75 million more than 2011.

''The recession significantly increased the number of borrowers in the scheme in 2009 and 2010, as fewer available jobs encouraged more people to become students,'' the annual report says.

''The reduction in the number of people participating in tertiary education in 2011, as the labour market gradually strengthened and in response to the movement of the birth bubble through the youth population, has led to a drop in the numbers borrowing.

''Policy changes in Budgets 2009 and 2010 - especially the introduction of an academic performance requirement on borrowers, changes to eligibility rules for New Zealand permanent residents, and changes to the entitlements for part-time students - may have had an impact on eligibility as well.''

Labour Tertiary Education spokesman Grant Robertson says the impact of the allowance cuts will be felt by the poorer communities the most.

''Thousands of students, mostly from low income backgrounds will no longer have support to do post-graduate qualifications,'' he said.

''This means they may never achieve their potential and that as a country we will all miss out. Education should not just be for those lucky enough to have deep pockets.''

Robertson says the Government has made a short-sighted move in limiting student allowances to four year programmes.

"A recent survey of post-graduate students showed that nearly 40 per cent of them would not be able to undertake study because of the abolition of allowances, with many looking to head overseas,'' he said. 

''It's especially hard on people, such as those wanting to be clinical psychologists or architects, who have to undertake postgraduate study to be able to work in New Zealand. 

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''It is sending a message to our best and brightest that their best chance of fulfilling their potential is overseas.''

Labour Tertiary Education spokesman Grant Robertson says the impact of the allowance cuts will be felt by the poorer communities the most.

''Thousands of students, mostly from low income backgrounds will no longer have support to do post-graduate qualifications,'' he said.

''This means they may never achieve their potential and that as a country we will all miss out. Education should not just be for those lucky enough to have deep pockets.''

Robertson says the Government has made a short-sighted move in limiting student allowances to five year programmes.

''It's especially hard on people, such as those wanting to be clinical psychologists or architects, who have to undertake postgraduate study to be able to work in New Zealand,'' he said.

''It is sending a message to our best and brightest that their best chance of fulfilling their potential is overseas.''

Tertiary Education minister Steven Joyce says New Zealand has the most generous student support system in the world.

''The whole idea that it would be less expensive and send people to study in Australia is ludicrous,'' he said. ''If you look at the Australian situation, the fees in Australia are significantly higher than in New Zealand.

''New Zealanders are less likely to qualify for Australian student support, Australians student loans are not available for living costs and Australian student loans are not interest free.''

Joyce says the reason this scheme was chosen was because post-graduates will earn more than double out of study compared to the people paying to support them in study.

''There is no doubt about it, they are not going to have access to student allowances but they will have access to student loans which remain interest free,'' he said.

''We wanted to make sure student allowances would target those from lower incomes households and those who had their early years in their first degree.''

Government expenditure on student allowances has increased 62 per cent, from $385 million in 2007/2008 to $620 million in 2010/11.

- Stuff

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