A tale of two students

Their parents agreed to pay for their accommodation and fees when they went to university.

Both chose to also borrow the maximum available under the student loan scheme.

She finished her first year with nothing left over. He finished his first year with * several thousand dollars in the bank.

This post was prompted by A lifetime of debt? at Kiwiblog.

When student politicians complain about fees and other costs of tertiary education and the burden of student loans, they always assume that everybody has to borrow the maximum amount available to enable them to study.

They don’t. Some get parental help, some win scholarships, some get additional allowances from the state.

Most have the choice of working before they start study, during holidays and at least part time while they’re studying to reduce the amount they have to borrow.

The example I’ve given also shows they have some choice over how much they spend.

* I’ve said “several thousand dollars” because I can’t remember the exact number but it was definitely more than a couple.

9 Responses to A tale of two students

  1. Eloise says:

    I had to get a full student throughout my study because my parents earned too much for me to get an allowance. My husband was the same. I worked 4 part time jobs over the summer before I started university and could only just afford to pay for a hall of residence. Summer jobs and part time work basically went on rent, power and food (after first year) because with trying to live on $150 a week there is little to spare for, well, anything really

    My husband and I between us have over $60,000 of loans just so we could try and get a better future for ourselves and we are choosing to study again because neither of us could get jobs with our first degrees. This time is a lot better because we are both over 24 and can get the student allowance but we still have to add our yearly fees onto that.

    I know some people get allowance and scholarships and parental help but most people I know are in the same boat as us. We’ll be paying off our student loans for years unless we decide to continue living like students while we work and try to bring up a family and have a decent life style which is one of the reasons we wanted to study in the first place. Will we be able to afford to buy a house while paying off our loans? Probably not.

    I think the operative word in your blog is some – some scholarships, some allowance, some parental help. From my own experiences and friends the ‘some’ you speak of are in the minority by far. All I can say is thank goodness our student loans are interest free otherwise it really would be a life time of debt.


  2. homepaddock says:

    ” because my parents earned too much for me to get an allowance.”

    This is what I regard as most unfair – some people get allowances because of what their parents earn(or the way their accountants arrange their books) while others don’t.

    People can get benefits regardless what their parents earn from 18 yet student assistance depends on parental income until they’re 25.


  3. gravedodger says:

    And of course a large number of young people attempt to make their way in the world by borrowing from a bank and with savings buy a small business, pay tax, GST, rates and by working long hours pay off the debt to the bank. I am at a loss to understand why it is such a different ball park for students.
    I found the comment that further study was required as the first degree did not yield any work opportunities facinatingto put it mildly.
    My eldest chick travelled the world as a skibum for over ten years, taking any other work as necessary, went to Massey at 28 passed her B Com with straight As and only borrowed from the “Bank” to finance a bit of wardrobe for job interviews. All off her own resources with zero parental support. She went into the study with a great attitude, focus and with a bunch of lifeskills and survival instincts intact.
    The heiress did one degree and has worked it very successfully We are very proud old buggers and find most of the angst about student loans just welfare gone bad. The total amount owing is mind boggling.
    Agree with the differential between students and other beneficiaries in reference to parental income somewhat negative and gives some very negative messages about self advancement.
    I have always held a view that going straight to tertiary study from school to be another mismanaged part of the maturity process and many students would benefit from some time out in the world for say two years while they actually figure out what they WANT to do with their lives, do some growing up and learn a little of the reality of surviving in the real world.


  4. Hollyfield says:

    Regarding student allowances, I agree with your point Ele. I also think it unfair that, when parents are not together, both parents’ incomes are used in determining whether a person is eligible for a student allowance. I want to support my daughter at university, perhaps by giving her free board (if she still wants to live with me!), but I know her father with his much higher income will not contribute financially once he is longer required to pay child support. And his income will make her ineligible for a student allowance. He only sees her every couple of months when he can be bothered, but they are not “estranged” to the point required to ignore his income when determining her student allowance eligibility.


  5. Eloise says:

    ‘People can get benefits regardless what their parents earn from 18 yet student assistance depends on parental income until they’re 25.’

    It’s 24 now and yes totally agree! Last year when I started studying again at 23, having been away from home for over 5 years and married for 2, I still couldn’t get an allowance based on my parents income!

    ‘I found the comment that further study was required as the first degree did not yield any work opportunities facinating to put it mildly.’

    Don’t get me wrong, our degrees did get us work – just not the work we had spent three years living off nothing for. I don’t see why I should work in a slightly above minimum wage paid job when I have borrowed $30,000 from the government to get a decently paid one.

    I agree about going to tertiary study straight from school. I know a lot of people that have done degrees out of interest, not thinking about what they want to do with their lives and then getting to the end of it and going ‘now what?’. I’m not placing the blame solely on the schools because in the end it is the persons decision but when I was at high school we had it drummed into us that if we didn’t go on to tertiary study after we had finished school we would never make anything of ourselves and be failures as human beings.

    I think the new rules on the loan system are great. You have to pass a certain amount of papers and can only get a loan for a set number of years. Surely this will help with the growing debt?


  6. mel says:

    I have to disagree with the figures in the Kiwiblog website – that a new grad earns $1055 per week. That’s nearly $55K a year – which my partner, with a Masters degree, is earning after 3 years in full time work. I have a BA and Law degree and started 4 years ago on $35K. No way can I pay off the $39,000 I borrowed in the time Kiwiblog says I can.

    Yes, I got a small scholarship – I bought a car to get to and from Uni. I lived at home for 4 years out of 5. I had 2, sometimes 3 minimum wage paying jobs, paying secondary tax. I had a good time at Uni but was not nearly the drinker that you imagine a Uni student to be.

    My mother gave me practically free board while at home but could not afford to pay anything more. My parents are separated and I was entitled to a student allowance as my father was made redundant and my mother worked part time. In my first year at Uni in 2002 the Government gave me $11 per week.

    Please don’t assume that grads with large debt were foolhardy or that most don’t need a high level of debt. The “average” student loan incorporates people who borrow for a one-off course as well, I think the “average” loan for the “average” university student would be well over $25K. Its a large chunk out of your pay for years after you leave and nothing grinds my gears more than those belonging to generations that had Bursary paid every fortnight with no fees complaining about today’s students.


  7. homepaddock says:

    Mel – I don’t know that Bursary was ever paid every fortnight.

    But in the days when students didn’t have to pay fees and allowances were more generous, there were a lot fewer people undertaking tertiary education and people were paying up to 66 cents in the $ tax on relatively low incomes.

    Given a loan over which I have some control over incurring and paying off or higher taxes once I’m earning I’d opt for the loan.


  8. mel says:

    Hmm, maybe my aunt was one of the lucky few – I’ve been told she got $200 every fortnight in the 80s which was a pretty sweet deal. (My A Bursary got me a one-off payment of $200.)

    That was of course long after the tax rate of 66 cents in the dollar. Which in turn meant free or inexpensive doctor’s appointments, a family (allowance? wage? thing my grandmother got per child that could be traded for a house deposit?) paid by the State, and sweet pension plans and a guaranteed retirement age of 65. At the latest. I may be paying less than half the income tax (supplemented through GST, ACC, petrol taxes etc) but I am only getting half the service.

    However with one point above I do agree – my degree would be worth more if not as many people had them. Then perhaps I would have started on a higher wage.


  9. homepaddock says:

    As far as I know Bursaries were always one off payments (when I was a student – mid to late 70s it was $100 for a B and either $150 or $200 for an A).

    Family benefit was, I think, $5 per child per week until they were 18 (or left shcool which ever happened first) and could be capitalised for a house deposit.

    It’s difficult to compare what we “get” for taxes paid now with then. People are living longer. Medical advances available now prolong life & improve the quality but also make healthcare more expensive.

    I can’t remember the exact figures but far more people live long enough to collect a pension now than they used to.


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