Study costs rising by degrees

By Sarah Catherall

Aucklander Sam Howell has set his heart on becoming an engineer. The former Auckland Grammar student could have studied his chosen profession in his home town, but is instead spending about $14,000 to live far away from friends and family, in Christchurch.

The 19-year-old has a part-time job and parental help, but has already clocked up about $5500 on his student loan.

"I really wanted to move away from Auckland to get some independence. I went to Christchurch because the university is not the only thing going on in the town," he says.

"I originally looked at going to Otago, but it seemed to be too much of a student party thing and I wanted to get more balance."

So far, says Howell, the move has been worth it, but like many other young people, he is still concerned about the rising cost of his tertiary education.

Under current rules, tertiary institutions have to apply to the Tertiary Education Commission if they want to lift fees by more than 5 per cent. While Canterbury plans to stick within that limit next year, other universities have proposed fee increases of up to 13 per cent.

Although many of Howell’s friends in Auckland chose to stay home to cut down on their study costs, their expenses are still considerable.

Auckland University of Technology, for example, estimates that a student who chooses to flat will pay $17,650 in a year, excluding fees.

"It seems to be getting more and more expensive to study and that’s really difficult if you’re not from a high-income family," says Howell.

In the 1990s, fees rose by an average of 12 per cent a year. The Government imposed a freeze from 2000 until 2003, but the University Students’ Association is concerned they are beginning to climb again.

Between 2003 and 2004, fees for full-time university students increased by an average of 4.8 per cent, to $3934. For the first time since 2003, the education ministry says, the increase outpaced the growth in average weekly income, making a university education less affordable.

Jenna Hansen expects to pay more to live in New Zealand’s biggest city. Formerly from Whangarei, the 19-year-old commerce student likes the community feel at Auckland University’s O’Rorke Hall, where she is paying more than $9500 for a room, or about $250 a week.

Hansen applied for a swag of scholarships, which are helping to fund her education. She hopes to switch to law next year, and expects to have run up a $45,000 student loan by the time she graduates.

Official figures show that three-quarters of all full-time students have a student loan, owing $14,997 on average. The total that students and graduates still owe is just under $6 billion.

With student loans now in their 13th year, Hansen expects to pay something towards the cost of her tertiary education.

While some of her friends have chosen to go to Waikato University or Otago, either for social or academic reasons, she was drawn to Auckland University’s reputation, and wanted to live in a decent-sized city.

"Everyone might think that it’s a big place, but you can’t knock that. There are so many good lectures and lecturers and the resources are just fantastic," she enthuses.

But the decision was not that easy for some of her friends. Some have taken a "gap year" - a year out of study after finishing school - because they couldn’t decide what to do. The cost of tertiary education means they’re not taking a chance by just studying anything.

Howell also lives on campus but his experience is a world away from O’Rorke Hall.

Halls of residence are part of the university tradition, where out-of-town students can expect to pay between $150 and $300 a week for a room. Some of the popular ones are hard to get into, with several applicants for each bed.

At College House in Christchurch Howell is paying more than $270 a week for a room and meals.

Once home to Kiwi actor Sam Neill, College House is the oldest university college in the country and definitely the most traditional. Modelled on colleges at Oxford and Cambridge universities, only one in four applicants are accepted.

Howell has made 152 new friends, and the "fresher" will return to College House next year as a "returner", where he won’t pay boarding costs in return for helping out.

During the week, he has to wear a jacket and tie to dinner beneath his academic gown, and twice a year dines at the "high table" with the college principal. Females were only welcomed in 1990.

He admits the formality was off-putting at first, but now enjoys the traditional aspect of student life that he first encountered at Auckland Grammar. "When you know more about it, and realise that you’re not allowed to leave dinner before the principal leaves the high table, you realise the point is that you sit around and mix with people. You sit with someone different every night," he explains.

Tradition also concerns College House deputy principal Bronwyn Lang. Before she shifted to Canterbury University, Lang worked as a careers adviser at Otago. She is concerned the rising cost of tertiary education is deterring students from an age-old rite of passage: leaving their home towns to study.

Under the loan scheme, students can borrow up to $150 a week to cover their living costs. They can also borrow $1000 towards their course costs and enough to cover all tuition fees.
But Lang is not impressed. Overall, the amount able to be borrowed is "quite miserable" she says.

"Students have to find another $120 or so a week to live here. Most are from middle-income families but quite a few get part-time jobs. Some do struggle.

"I think it’s very important for people to get away from home if they can. If you live in Auckland, then to get away and go to Canterbury is just brilliant for self-development."

Since 2003, the Tertiary Education Commission has received 10 applications from tertiary institutions to lift their fees higher than 5 per cent, including two from Otago University and one from Auckland University.

Victoria University public policy professor Jonathan Boston says the reason is relatively straightforward: universities simply aren’t getting enough funding from the Government, and haven’t been for some time.

"For the past five to six years, the universities have been cushioned to some degree by the rapid growth in international student numbers, but that growth has now tailed off and the overall cushion has gone."

The University Students’ Association’s last income and expenditure survey showed that, nationwide, students spent an average of $18,881 last year - a 23 per cent increase on their bills in 2001. But only a third of those surveyed received a student allowance, and only 28 per cent were lucky enough to get financial support from their parents.

Association co-president Camilla Belich blames Labour-led governments for failing to reverse the tertiary fee increases that National allowed in the 90s, which sometimes soared by 25 per cent in a year. While universities might give indications of what their courses are likely to cost, it’s very difficult for students to compare the costs, she says.

While the association would like to think that students choose a university for academic reasons, cost will inevitably be a factor for some.

"We can generally say that fees are quite high and they’re the highest they’ve ever been."

The good news for school leavers like Josh Leen is that his student loan will not rack up interest while he’s studying, and he can also avoid interest payments if he stays in New Zealand after graduation. Labour’s pre-election pledge to wipe interest for graduates who stay in New Zealand is due to be introduced in April, worrying universities who fear they won’t get the funding they need to cover rising salaries and other bills. Leen, who is head boy of St Patrick’s College in Wellington, has been to Dunedin a couple of times to visithis older brother Ben, who will soon graduate.

For as long as he can remember, he has wanted to study at Otago University and live at Selwyn College. He’s still on the hostel waiting list. Drawn to the campus town and party lifestyle, he says: "I’m pretty excited. I’m really ready to move on from high school and to leave home. I’m just waiting now to see where I’ll end up living."

But he’s heading to a university where students typically accumulate a large amount of debt. According to the University Students’ Association, Otago students chalk up $14,223 in debt each year. Auckland University students are not far behind, typically clocking up an average $12,581 every year.

The reason for Otago’s high debt levels is because of its expensive medical and dental schools, says its media spokesman, Simon Ancell.

While Otago has increased its fees twice in the past two years, it likes to point out its fees are still among the most affordable in the country.

And according to Ancell, the university had little choice but to pass on a big increase in costs, with academic and staff salaries alone $12.5 million higher than forecast.

Student allowances are only available to students whose parents earn less than $62,148 a year. Leen’s parents earn more than that, so he will be forced to rely on them for help, and will also take out a student loan to cover the costs of his psychology degree.

Like many school leavers, he prefers not to think too far ahead and doesn’t seem fazed about getting into debt - for now.

"I’m a little bit ignorant. You see the ads saying that Otago is not as costly to live. I’d have to get a student loan wherever I go and I know that Otago is the place for me," he says.

According to the Vice-Chancellors Committee, Leen’s attitude is typical. Committee chairman Stuart McCutcheon says research shows that fee rises do not necessarily deter students from enrolling in certain courses. In some cases, more students enrol when fees go up.

Of concern to the university heads is the potential cost of Labour’s pre-election promise to write off interest for students who choose to stay in New Zealand. While Labour has forecast this will cost $300 million, one scenario - rejected by Labour - predicted it could soar to $924 million by 2019.

At the same time, McCutcheon says, universities would need a 40 per cent rise in Government funding to take them to the funding level of their Australian counterparts.

The problem, he says, is that the Government increases per student funding at the level of the Consumer Price Index, even though university costs are rising at 1.6 times that rate. The shortfall has to be made up through fee rises.

"We’re concerned that if the Government spends $300 to $500 million on interest-free loans for students ... that will constrain the extent to which it can increase the level of investment in universities. "There is only so much money to go around."

And he suggests that students are actually quite well off, with 39 per cent of the Government tertiary budget going towards their support, compared with 32 per cent in Australia.

It is simply unrealistic, he says, for students to expect the interest on their loans to be written off, and for fees to also remain static.

"That can only happen if the Government decides to have it both ways."


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