Minister compromises on solo mum study loans

Paula Bennett. Photo / Brett Phibbs

Social Development Minister Paula Bennett has made a small compromise on cuts to a study allowance for single mums at university - she will announce today a new loan of $500 for those studying in areas such as nursing, medicine and teaching.

The loan follows controversy over Ms Bennett's decision to cut off the Training Incentive Allowance to single parents and those on invalids' benefits who were studying at a tertiary level.

She is still being investigated by the Privacy Commission for releasing the welfare income details of two solo mothers, Jennifer Johnston and Natasha Fuller, who had criticised the move in the media.

The idea of the loan came from one of the two mothers, Ms Johnston, who was studying nursing part-time and planned to begin full-time next year.

The no-interest loan will top up the $1000 available for study-related costs under the student loan scheme. However, it would be available only to those studying in areas where there was a shortage of workers - nurses, doctors, midwives, vets and teachers.

It is less than half the maximum amount of the Training Incentive Allowance, which provided up to $3862 a year for childcare, course costs and transport.

Ms Johnston said while the new loan was less than the allowance and could mean some were unable to study, she was thankful that at least some extra help was being provided.

"I am pleased they were able to find a compromise. It would have been nice if it could have been more, but we are in a recession, I understand that, and if this is the best the Government can offer at the moment we have to accept it. A few months ago, when this first started, we weren't getting anything at all."

Ms Bennett conceded some people would say the $500 loan was still too little, but it was a compromise.

She said it was not a concession that she was wrong to restrict the Training Incentive Allowance, saying difficult economic conditions meant resources had to be focused where they were most needed. However, she had received a number of letters making a "compelling case" for extra help for those who faced extra costs and were limited in the work they could do over holidays.

Students on medical courses also faced higher equipment costs than others.

It will initially only be available until January 2011 while support for study is considered as part of a wider review into implementing National's policy of requiring single mothers to work part-time once their children are more than 6 years old. Any new scheme to help studying would be rolled out as part of the wider programme.

It is estimated the loan would be used by about 800 people in the first year and is expected to cost the Government $599,000 - including $171,000 to cover borrowing the money and writing off bad debts.

The loan must be repaid at a minimum level of $4 a week once the recipient has finished the course or goes off the benefit. It will be available from February 2010 through Work and Income.

* What they get

$500 interest-free loan.

Available for those on domestic purposes, invalids and widows benefits, as well as emergency maintenance allowance.

Only for nursing, medicine, midwifery, vet and teaching courses.

Available from February 2010 to January 2011.

Expected to be used by 800 people.

Replacement support will be considered as part of wider review.

Previously qualified for a maximum of $3800 under Training Incentive Allowance.