Generation gap 2


John Roughan’s column is worth reading in full  .

It’s one of few realistic views on student fees, allowances and costs I’ve read and concludes:

Announcing their living allowance would gradually lose its parental means test, Helen Clark said her “dream has always been to enable our young people to have the kind of support that my generation had”.

Her dream is unduly romantic; our generation did not live as well at university as today’s students do. A student of today dropped into a campus of 1970 would notice the clothing, vehicles, bookshops, cafeteria food and general surroundings much plainer and poorer.

About the only thing more lively in 1970 was the politics and it would strike today’s students as immature. It was generationally embarrassing in Tuesday night’s television debate when Helen Clark could not believe John Key had not taken sides on the 1981 Springbok Tour.

It is not hard to believe a 20-year-old commerce student with conservative views and a new girlfriend was among those not particularly interested. He spans the generation between me and my kids and makes mine seem suddenly dated.

When I consider the economy we have given them, it is not tertiary costs and their debt that I regret, it is the housing debt they face because the baby boomers never learned to invest in anything more productive. Most of my generation never learned to invest in themselves. That’s the difference.

And is one of the reasons too many of my generation – for I’m a baby boomer – didn’t invest in themselves is because we were brought up with governments doing too much for us?

I think that’s part of the problem and one of the reasons we should be very careful of Labour and other parties on the left who think the government should do more because we’ll pay dearly for it.

Taxpayers need return


The Timaru Herald makes a very good point about taxpayers’ largesse to students:

Under Labour, students have done well. Nearly $2 billion in interest charges have been written off, there is zero interest providing certain conditions are met, and now allowances could become universal.

This is all at the expense of the taxpayer, and perhaps it is time we asked for something in return. A requirement on students to perform satisfactorily or forfeit the allowance would be one way of ensuring the investment was not wasted; another could be bonding the graduate to work in New Zealand for a certain period rather than instantly gallivanting overseas. Such moves could also dilute the label of cynical vote-catcher from Labour’s policy.

Both these suggestions have merit, especially the idea of bonding.

I’d prefer most of the assistance to students to be given to graduates rather than at undergrads who may or may not finish qualifications and if they do qualify, may or may not work in New Zealand. That way the country gets a return from the very generous investment in their education.

Progressive move to universal student allowance – Hodgson


Tertiary Education Minister Pete Hodgson says that Labour’s Policy  is for a progressive move to a universal student allowance rather than a direct move.

His comments follow speculation Labour will offer a universal student allowance as an election bribe, a policy which appeals to the Greens.

Green MP tertiary education spokeswoman Metiria Turei said the Government should provide a timetable for moving to universal allowances.

“Maybe toying with student livelihoods is just political game playing, but student debt is no fun at all for the generation which has grown up struggling with debt repayments, let alone trying to buy houses or start families,” Mrs Turei said.

Paying higher taxes for election bribes isn’t much fun either and money spent on direct student support is money that’s not available for other areas of education.

The New Zealand Vice-Chancellors’ Committee said speculation about the universal allowance was unhelpful and the country was spending well over the OECD average on student financial support.

The organisation said funding for tertiary students was more than twice the rate it was for tertiary education institutions. Forty-two percent of tertiary education spending went to student financial support, compared with an OECD average of 18 percent.

Students should put their efforts into strategies to improve the quality of education rather than the quantity of allowances.

Education lobby group, Education Forum, policy advisor Norman LaRocque agreed with the university vice-chancellors.

“Putting money into student support, rather than into funding for TEIs (tertiary education institutions), would do nothing to improve the performance of the tertiary education sector in New Zealand,” he said.

Over generous subsidies send all the wrong signals, encouraging participation rather than rewarding effort.

Students and the country would be better off if more went into teaching and teaching reources; or encouraging graduates in areas of skills shortages, as National has suggested doing by writing off a portion of student loans for each year medical graduates work as rural GPs.

$728m student election bribe


The country is facing recession, galloping inflation, the public cupboard is nearly bare and Labour is considering a $728 million student election  bribe to give students a universal allowance.

 The policy would enable about 47,000 fulltime students now ineligible for an allowance to receive taxpayer support and would be the biggest single boost to student incomes since the allowance scheme began.

Tertiary Education Minister Pete Hodgson said yesterday that in January this year he instructed Education Ministry officials to cost a universal student allowance.

But the subsequent paper produced by officials “should not be construed as a signal the Government intends to introduce such a policy”.

“The paper was prepared in order to get a better understanding of what the real costs of a universal student allowance would be,” he said.

The paper shows that removing income tests on the allowance and providing it to all fulltime students would cost a total of $2.09 billion over four years.

The net extra cost of such a plan is $728 million after the existing costs of the scheme are removed, along with a forecast plunge in borrowing under the student loans scheme that might accompany such a plan.

There are inequities in the current scheme which is based on parents’ incomes. But a universal allowance is not the most pressing need in an overstretched education system.  

Students have long campaigned for a universal allowance and such a scheme is party policy for both NZ First and the Greens. UnitedFuture backs extending allowance payments to all students aged 20 and over.

The students campaign has been based on several misaprehensions including their claim that they are the only ones who have to borrow to live.

Many people in owner-operator businesses borrow to live. Dairy farmers receive monthly payments but sheep, beef and cropping farmers pay for all their inputs then wait months to get any income, borrowing seasonal finance to get them through until they sell their stock, wool or crop.

It is understood Labour has also considered increasing the allowance to as much as $350 a week, but this has been ruled out as too expensive.

And $728m is not too expensive?

A universal allowance would echo Labour’s king-hit, interest-free student loans policy in the 2005 election campaign, which was credited with turning around the party’s polling and sending thousands of voters to Labour.

Only 57 per cent of students receive the allowance, which is $122 a week for those under 25 and living at home, $153 a week for those living away from home, and $184 for those aged over 25.

That is because the allowance is means-tested on personal income and, for students under 25, their parents’ income.

It is ridiculous that people under 25 can claim a benefit regardless of parental circumstances while students needs are judged on their parents’ income. But why not lower the age to which students have their allowances set by what their parents earn and offset the cost by increasing the age at which beneficiaries are regarded as independent?

Measures announced in this year’s Budget included a 10 per cent increase in the parental income threshold, lowering the age for parental income testing to 24 and increasing the amount students can borrow for living costs from the student loans scheme by $5 to $155.

Under Labour, the number and value of allowances paid to students have continued to fall.

Ministry documents show that since 2001 the number of students eligible for an allowance has plummeted by 32 per cent as parents’ incomes have risen sharply, pushing many above the threshold for the allowance.

There could be a case for raising the parental income threasholds.
 A study by market researcher TNS Conversa revealed average student debt has risen by 54 per cent since 2004 and is now $28,838.

 The ministry says a universal allowance would lead to a substantial reduction in borrowing under the loans scheme.

No doubt it would but that still doesn’t justify spending $728m to do it when the case for universal allowances is far from compelling and there are many more pressing needs for the money.

Students to get $350 weekly allowance?


Remember how Labour trumped National on the eve of the last election with its interest-free student loan policy? Colin Espiner wrties in The Press today (not yet on line) that another student election bribe is in the wind.

It is understood Labour is considering a massive boost to the student allowance scheme, including a payment of some $350 a week for study courses of 35 hours a week or more. That would put student allowances far ahead of any other standard benefit payment. It would cost a lot of money, but may not have the same impact as interest-free loans did in 2005.

Students and student politicians might think this is a good thing and they may be able to make a case for a small increase. But a $350 a week allowance, so much higher than any other benefit,  is not the best use of money in the over-stretched education budget.

Students and their representatives put a lot of energy into crying poor, but instead of worrying about loans and allowances they ought to be worrying about the quality of their education.

Every dollar that goes to a student allowance or interest free loan, is a dollar less for teachers and teaching resources. Improving those would be better use of taxpayers dollars than an over-generous student allowance scheme.

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