10 Cuts The Government Has Made To Make Life Harder For Students In New Zealand

Since 2010 there has been over 20 cuts to student support making your life harder #thestruggleisreal

1. It is now a criminal offence for an ex-student to be behind in their Student Loan repayments

If students are living overseas for more than 6 months, and they knowingly defaulted on their overseas-based repayment obligations, they can be arrested and detained in New Zealand until they have repaid their Student Loan. Obviously, any students who borrow have an obligation to pay back their Student Loans, but more logic and common sense needs to be used to recover payments. Regardless of the ability for students to pay, they are required to make repayments based on their total Student Loan balance, and not their current income; and unlike domestic students, students abroad don’t have an employer to automatically deduct the payment from their wages. Treasury advised this law would increase noncompliance, and the NZ police have said they would they do not want to use their resources in this way – preferring not to be Inland Revenue’s debt collectors. This law is a political gimmick to beat up on students, and a missed opportunity to tackle the real issue of student debt.

2. Students aged over 40 restricted to 120 weeks of Student Allowances, including anything used before they were 40 AND students aged over 65 are ineligible to receive allowances.

This insidious change undermines lifelong learning. New Zealand’s universities, wānanga, and polytechnics, are publicly owned and should be accessible by New Zealanders. Using age as a factor to retrospectively restrict allowances is probably challengeable under the Human Rights Act 1993. Many mature students return to study to just complete an extra qualification they need to up-skill and retrain, before going back into the workforce. This change means education is restricted to those with the ability to pay, not the ability to learn.

3. Repayment rate increases from 10%-12%.

After students start earning, or are predicted to earn, over $19,084 annually – less than full-time minimum wage – 12 percent of their income above the threshold is automatically deducted to repay their Student Loan. This makes New Zealand’s Student Loan repayment scheme one of the most aggressive in the world. To put this in perspective, in Australia, students are not required to repay their Student Loan until they earn more than $53,245, and even then, repayments start at 4 percent and increase in bands until is peaks at 8 percent – after earning $99,070 per annum. The $19,084 Student Loan repayment threshold was frozen in 2012 and will continue until 2017.

4. Post-graduate Students Allowances removed.

Students are now ineligible to receive a Student Allowance if they are engaged in post-graduate study. Arguably this is when students require the most support, as it’s when their study programme is the most difficult. This is also a bigger problem, because although they can borrow costs to pay their most basic living costs (i.e. rent, transport, food), it’s significantly lower than the Student Allowance. Students are the only sector in society expected to borrow to feed themselves. Restricted support for post-graduate study means students enrolled in advanced programmes will be less likely live and study in New Zealand, a loss economically, culturally, and socially.

5. All exceptions to 200-week limit on Student Allowances removed.

Full-time students studying for more than four years will no longer have access to Student Allowances. Almost all conjoint programmes, and longer qualifications like medicine, require a study programme beyond 200 weeks. Additionally, students who require additional support, for example, bridging or foundation courses, can also use up their 200 weeks before they finish their programme. In severe cases, students near the end of their studies will find they are no longer eligible for support and are forced to abandon their studies. This has particularly negative effects on equity groups who often need more time to understand their passions, and complete their qualifications.

6. Parental income limit frozen. No longer adjusts with inflation making fewer students eligible for Student Allowances.

Up the age of 24, the ability for students to receive a student allowance is means-tested against their parents combined income. Targeted support is often arbitrary and unfair, even the architect of the scheme, Lockwood Smith, said ‘I was never happy with it… it was so transparently unfair.’ Since 2012, if a student lives at home and the combined income of their parents is greater than $84,164, or, if the student is living out of home and their parents combined income is greater than $91,448, that student can’t get a Student Allowance. By freezing the income limit, as wages increases, more students will be ineligible to receive Student Allowances.

7. Introduction of a 7-EFTS lifetime limit on borrowing for tuition fees.

This change means after seven years you can no longer borrow money to pay our tuition fees. The group most vocal about this change has been medical students; medical students can’t specialise after seven years of study, and for students who transfer from health into medicine - they can't even finish their degree before reaching the seven year cap. This directly contributes to the brain drain and sends our brightest young things overseas. It also severely restricts the ability for many students to choose postgraduate study.

8. Access to the Student Loan scheme is removed for students who didn’t pass half of their papers in the previous two years.

Of course current students should pass their papers; but sometimes there are circumstances that need to be considered when assessing poor performance. After engaging in study many students discover the programme isn’t for them, they might suffer a personal tragedy, or there could be other extenuating circumstances that explain poor grades. If students are cut-off from access to the Student Loan Scheme, they are saddled with a huge debt and nothing to show for it.

9. Student Loan establishment and administration fee.

In 2011 the Government increased the student loan establishment fee from $50 to $60 – this is the upfront cost required to open an account with Studylink. Also, the Government introduced an annual $40 administration fee for students who still owe Student Loan debt. This is has been criticised as ‘interest by stealth,’ since Student Loans have been interest-free since 2006. Together the establishment and administration fee generated $32.8 million dollars in revenue for 2013/14.

10. Residency requirements for Student Allowances and Student Loans.

A change in 2013 increased the time a student has to wait before accessing Student Loans and Allowances – from two, to three years. This requires immigrants (including Australians, and members of the Cook Islands, Niue, and Tokelau Islands) to have resided in New Zealand under the Immigration Act 2009 for three years. The problem with this however, is that these New Zealanders don’t enjoy the same rights and privileges as other New Zealanders.