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May 7, 2012 | by  | in Opinion | [ssba]

Presidential Address

Oh what a week it has been!

After weeks of mystery surrounding the Government’s intended changes to the student loan scheme, on Thursday last week Tertiary Education Minister Steven Joyce announced some big changes for students (and graduates) in the upcoming budget.

Both Steven Joyce and John Key had signalled earlier in the year that there would be some quite radical changes for students in the budget, and oh boy have they delivered on that promise. In a pre- Budget announcement Joyce outlined a set of changes that are expected to take $250 million off the loan book and create savings of around $60 million per year.

These include:

  • Access to student allowances for your first four years of study ONLY;
  • Four year freeze on the current parental income threshold for eligibility to allowances;
  • Increase of the compulsory student loan repayment rate from 10 per cent to 12 per cent; and
  • Probable cancellation of National’s loan repayment incentive scheme, which offered a 10 per cent discount on voluntary loan repayments over $500

These proposed changes are part of the Government’s ongoing campaign to tighten eligibility for student support and push for faster loan repayments. Earlier this year the Government passed a bill which saw the reduction of loan repayment holidays from three years to one. And in the Budget last year the government cut access to student loans and living costs for people over the age of 55 and removed access to course related costs for students studying part time.

For me, one of the most bizarre things about this announcement is that it has come just weeks after the NZ Longitudinal Graduate Survey Baseline Report announced that 15 per cent of students are living in ‘absolute financial distress’. That means that about 1 in 6 students are unable to afford the basic necessities of life such as food, clothing and shelter. Which would indicate to me that the current government support is not enough, or at least it is not getting to the people who need it the most.

The support structures that are currently in place, such as the student allowance, although not universal, are an integral part of ensuring that students have the support they need to succeed in tertiary study. By limiting this support, the Government is also limiting students’ ability to achieve.

But just as alarming as the 4 year limit on student allowances, which as I understand is likely to be applied retrospectively, is the increase in the compulsory minimum student loan repayment rate from 10 per cent to 12 per cent. That is a 20 per cent jump in the amount graduates will have taken out of their pay once they earn over $19,084 a year. While that may not seem like much, when you take into account our low repayment threshold at just over $19k a year, that is going to put further financial pressure on graduates who are trying to get started in their careers, purchase a home, start a business, or raise a family.

Yes, we do need to make sure that students pay back their loans, but we also need to ensure that they have enough money to live on and enough support to be successful in their study. While it does have great private benefit, we must not forget that tertiary education is also a public good and to ensure we come out of this current economic climate a stronger, we need to invest in tertiary education and students. Students should not disproportionately bear the brunt of the current economic climate when they are essential to us emerging from it stronger.

From the above data you would assume that the current support is not enough or is not reaching the people it really needs to. But our current Government wants to cut it.

Are you concerned about the proposed changes to student loans and allowances in the Budget? Will it affect your ability to study in the future? If so we would like to hear from you! Give me an email on


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