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May 15, 2014 | by  | in Homepage News | [ssba]

Increases in Science Funding; Students Forced to Repay Loans Quicker

Science funding has increased in the Budget, but the threshold at which all students will have to start repaying their loans will decrease in real terms.

The Budget, released at 2 pm today, included an additional $85 million in tuition subsidies for STEM (Science, Technology, Engineering, and Mathematics) students. This is broken up into $67.9 million for science, $8.5 million for agriculture, $3.8 million for pharmacy and $3.1 million for physiotherapy. It also includes $13.2 million for 34 additional medical places.

Minister for Tertiary Education Steven Joyce said that the additional funding continues the Government’s focus on STEM subjects which have been “historically underfunded” compared to Humanities and Commerce.

“Investing in science-based skills is crucial for innovation, productivity and growth in the New Zealand economy, which is a key focus of our Business Growth Agenda,” Joyce said.

VUWSA President Sonya Clark said she was sceptical that the funding increase will translate to reduced student fees.

“The Government has chronically underfunded the tertiary sector for a number of years now, leading to perpetual fee raises. The increase in funding is unlikely to result in reduced fees as universities are still playing catch-up.”

The Government is continuing the suspension of inflation adjustment on the Student Loan repayment threshold until April 2017.

The current threshold is $19,084 a year, or $367 weekly. Student Loan borrowers earning above this amount have to repay their Student Loans at a rate of 12 cents in every dollar earned over the threshold, after the Government increased it from ten cents in April 2013.

Current projected inflation rates indicate an eight per cent increase by 2017. If the Student Loan repayment threshold were adjusted for inflation, it would increase to $20,610.72 by 2017. This would mean you would need to earn $396.36 a week, or an extra $30, before having to repay your Student Loan.

Clark said that the combination of the 12 per cent repayment rate and the low repayment threshold mean that “already indebted graduates have the highest effective tax rate in the country.”

Average annual wages are predicted to go up by 14 per cent, but this is cut down to four per cent by the projected-inflation prediction. There is a projected surplus of $3.5 billion by 2017/18, debt will be under 20 per cent of GDP by 2020, and the Government will resume contributions to the NZ Super Fund by 2019/20.



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