Many students and graduates are condemning the decision forcing most families to increase student loan repayments by 20 per cent, reducing their take-home pay.
Tertiary Education Minister Steven Joyce wants to decrease funding of student allowances, loans and tertiary institutions, while forcing employed loan-holders to pay back their loans more quickly.
Students now have a seven-year cap on their loans, and many will have a four-year cap or cut on their student allowances. Like all other student loan-holders, students - many of whom pay secondary tax - will also have 12 per cent of pay docked on earnings over $19,084. Joyce conveniently forgot to mention this in his announcement.
Access to tertiary education is increasingly difficult; more so now as thresholds for parental income to qualify for student allowances will be frozen. Figures released last month show that for those that do have access, 15 per cent are living in absolute poverty, unable to afford basic necessities such as food, clothing, and accommodation.
Some of the other 85 per cent work full time while studying part time and earn more than graduates in an entry level job.
But unlike full-time students, they are not eligible for student allowances; they still have to fund their own course-related costs such as buying text books and flights to on-campus contact courses. The four-year time limit on student allowances means that the government is content to force many postgraduate students to fund their own studies or go into debt, without clarifying why they should do so when others are not required to.
Joyce says he wants to wants to dampen the demand for access to tertiary education to ensure student numbers decrease. That's obvious. The government also wants to place a cap to force institutions to limit further rises to compulsory fees, while at the same time inadequately funding these institutions. A successful dampening of demand will mean that students won't be so much of a drain on the taxpayer far better be slightly less of a drain on the taxpayer in collecting the dole or by living in Australia. That makes as much sense as cutting course-related costs from part-time students - the very students who are most likely to stay in New Zealand, employed, after graduating.
There are two main reasons students get allowances: Many can't get jobs to supplement their study; others who have completed study can't get jobs so they go back to university but can't get part time work so they also get the allowance.
They also get course-related costs. Part-time students including a high proportion of extramural students are not eligible for student allowances, nor are they eligible for course related costs. As a many work full time they still have to pay off their student loans. But if they lose their job or have their hours reduced they will be so financially stretched that they will not be able to continue studying without going into debt to live. Some may quit and will not be able to reach their full potential which is what Joyce means by dampening demand for tertiary education.
Meanwhile the government is spending millions of dollars each year administering a student loan repayment scheme where those paying over and above the minimum can get a 10 per cent discount on their loan repayments. Yet smart loan-holders with money are not utilising this scheme as they can earn compounding interest on that money equating to more than the offered discount.
Part-time students are the least supported group of students in New Zealand, while being the smallest drain on the taxpayer. They work, pay taxes, pay off student loans while studying, and are more likely to stay in New Zealand when they graduate because they already have a job.
* Dave Crampton is the vice-president of the Massey University Students' Society, representing 17,000 students nationwide.