After just the first week of the nation-wide lockdown, Ministry of Education officials warned the Government that some tertiary students were already dropping out of university and going onto the unemployment benefit because of the higher payments.
The officials said that because of Covid-19, many students had lost the part time jobs that were supplementing their student loans or allowances and were struggling financially.
The advice is in a paper to Hipkins on April 2 and formed the basis of the student support package Hipkins later announced.
It said student were also facing unexpected costs – such as extra internet and power bills from studying at home - and many who had jobs would not benefit from the wage subsidies because of the contracts they were on.
" We are already hearing of students withdrawing from tertiary education and moving to the welfare system (because that provides them with higher rates of financial support).
"For many students the benefit system will offer more financial support than the student support system in the short term. This might encourage them to withdraw from study, particularly in the current context."
They warned that some of those students might never return to tertiary education. They recommended a boost to student's support – through the course-costs related entitlements – as a short term fix to close the gap between student support and the benefit.
It recommended an increase of $500 to $1500 in course costs entitlements, and the Government agreed on $1000 – estimated to cost $36 million.
"This change would also help mitigate the risk of student withdrawing from study as it would address the gap in the available financial support through the student support and benefit systems. For example, an increase by $1,500 would provide an additional $37.5 per study week."
The Government also agreed to urgent changes to allow student allowances to continue to be paid – at the time after three weeks of not studying, allowances ended.
That was extended to eight weeks, and student loans were also boosted.
The officials also got approval for MSD to assess the parental income threshold for qualifying for an allowance on the basis of an 'anticipated' drop in parental income.