Possible limits on new student loans

New residents and Australians may have to live in New Zealand for two years before they can get student loans, Tertiary Education Minister Steven Joyce said today.

Speaking on TVNZ's Q&A programme, Mr Joyce outlined changes to the tertiary sector - including reducing the number of tertiary education course, allowing some expensive courses to charge higher fees and tightening up access to student loans.

Mr Joyce said the Government was considering limiting the number of years a student could continue to get loans before they passed their first degree to six or seven years, which would save between $10 and $20 million.

The Government was also looking at whether there should be a stand down period before new residents could access student loans,

Currently new permanent residents and Australians moving across the Tasman are not allowed to get welfare benefits until they have lived here for two years and Mr Joyce said this created an incentive to sign up for tertiary education courses.

As a result, the Government was considering matching student loans with the two year benefit stand down period.

Mr Joyce confirmed the Government would tie in 5 per cent of tertiary institutions funding to the pass rates of some courses and reduce some of the 6000 qualifications being offered around the country.

The first step would be to weed out the courses that were dormant or not being offered, as well as look at nationalising some regional courses.

Mr Joyce also said there would always be some regulation of student fees, but the Government was looking at some changes.

"I'm looking at whether we should retain the maxima for those expensive courses, or whether there perhaps should be a percentage increase that's similar right across all courses regardless of whether they're expensive or inexpensive," Mr Joyce said.

"There will be the potential for some of the more expensive courses to increase in cost... but we're not talking a dramatic change. What we are going to do once we've made some initial steps is actually go and have a really good look at university course pricing and tertiary institution pricing, because they were last looked at in the mid-90s and some of them are getting highly distortionary relative to the actual cost of providing the course."

Labour's tertiary education spokeswoman Maryan Street said the changes would hurt students with higher fees and living costs as well with no compensation for the increase in GST.

The fee increases would hit medicine, dentistry and other high-cost courses would be less appealing to students, which would not bode well for New Zealand's future health and science needs.

"But as well as that, Steven Joyce said that he has no changes planned for student allowances in the forthcoming budget. That means that, as we feared, there will be no compensation for students for the proposed 2.5 per cent increase in GST.

"So their fees are likely to go up, and their cost of living will increase by at least 2.5 per cent with the GST increase, but their student allowances will remain the same."

- NZPA