Steven Joyce has indicated the changes to student loans and allowances could see $60m to $70 million in annual savings for the Government to reinvest in tertiary education provision.
Wherever the savings go, the Government will need to make statutory, regulatory, policy and operational policy changes to tertiary education. But there may also need to be a cultural shift in the way families function if we are to deal sustainably with the ballooning cost of student loans and allowances.
Student loans and tertiary funding are not just technical issues, nor are they just about finding more money to put into education. Education is a joint investment where the student, their family and the taxpayer together make decisions about who should study, to what level, and who should bear the costs and reap the benefits.
The Asian "system" leaves it largely up to parents to fund their children's education, with fierce competition for limited scholarships. In return, parents expect to reap some of the benefit through financial support from their children in old age, and for this reason tend to favour "prestige" courses such as medicine, law and business. In New Zealand, the state has to a large degree taken over the parental role by funding study, but it has until recently exerted much less influence upon choices of whether to study and what course, and been relaxed about making sure there is a return on the investment.
My parents had little in the way of money but they placed a great value on education and expected my sisters and I to succeed. I think having nothing was the best spur to me to get educated. I lived at home until I graduated with my law honours degree. I paid no board. My parents housed and fed me and transported me around when we couldn't hitch a ride with anyone else.
I remember my grandparents visiting us from Taiwan when I was at university and my grandmother laughing her head off when I told her I was paid a bursary by the Government to study. Student tuition fees were minimal then, so after paying the fees, I still had quite a bit left of my bursary allowance. There was no student loans scheme then and I didn't need one. My grandmother, who was a very astute business woman, winked and said "don't tell them, it should be the other way around".
In Taiwan, a parent will start saving for their child's education when the child is born. How you fare in the education system determines what profession or job you can have, so every parent saves all they can to advance their child in a society as competitive as Taiwan. When I visited recently, a cousin told me that they could not afford to have more than one child because of the high cost of education, with the extraordinary expenses starting from primary school.
If the Government offers less support for tertiary study to students, the onus will shift to the students and their families to assess whether embarking upon a degree is worthwhile. This impacts on what kinds of students we have and what kinds of skills they learn. Students and their families are understandably focused on the level of financial security they will have in the future. But this could be at the expense of unconventional studies that innovative economies depend on.
Steven Joyce, Minister for Tertiary Education, Skills and Employment, has said that New Zealand is among the most generous for student loans in the world, but among the lower end in terms of investment in provision. The Tertiary Education Commission is responsible for investing in tertiary organisations. However, it has had to put a cap on funding because of the limited amount of money available in the Government's coffers. This has resulted in tertiary providers either having a long waiting list of students who can't get in or carrying "unfunded" students they are training anyway. The latter is unsustainable for the tertiary organisation; the former is unsustainable for the country, especially when many on the waiting list are Maori and Pasifika. There are also Crown Treaty of Waitangi obligations attached to Maori educational achievement.
These public policy trade-offs are what we elect politicians to decide, with advice from departments, but it is important that New Zealanders voice their views on what balance to strike and understand the implications for our culture.
The student loan scheme changed the culture of New Zealand families, perhaps in ways its designers never intended. This time round, let's have an informed public policy debate about what the changes will mean, not just an argument about how much money we should put in the pockets of students.
Mai Chen is a partner in Chen Palmer and author of the Public Law Toolbox.