This month Child Poverty Action Group launched their investigative report “Laybying Our Future: The State of Student Hardship in New Zealand”. CPAG is an independent advocacy group that focuses on research and education, promoting policy changes and raising awareness of the causes, consequences and solutions to child poverty. They commissioned a report by Max Lin, a student at Auckland University, which demystifies the problem and makes several suggestions for alleviating it. CPAG’s position is that, while their focus is usually on children under the age of 18, children are further disadvantaged in tertiary education through the cycle of poverty, as are children whose parents are struggling students.
To quote the report: “The issue of student debt is often cited as a deterrent, but perhaps a greater barrier to tertiary education is the immediate financial hardship while undertaking study.” Most students would agree that the only way to stay sane is to defer thinking about your huge debt until after graduating.
This to me is the crux of the report, and a point sorely missed by many media outlets, including Radio New Zealand, who published an item on 3 August titled “Rethink interest-free student loans, says poverty action group”, choosing to highlight, out of context, one short paragraph in the 28-page report. I agree it’s an unfortunate recommendation, it nevertheless didn’t warrant this much attention at the expense of numerous excellent suggestions in the report, such as unfreezing the parental income threshold and increasing the eligibility and amount of student allowances. The report also acknowledges that these are “Band-Aids to a bigger problem” that “cannot be solved by targeting tertiary education in isolation”.
The comprehensive findings of the report include research into student fees, loans and allowances over the past 30 years, the rising cost of housing and students’ sometimes tragic solutions to this, a breakdown of living costs in different cities, the cost to mental and physical health, the effects of working while studying. It illustrates these with several case studies. Those who fall through the cracks because of the unfair parental income threshold are not just a tiny minority. But the report found that even for those students who are eligible, the student allowance is insufficient to live on, especially in Auckland. Notably, the number of students accessing student allowance have declined by around 20,000 in the past five years. Many students have to work while studying to an extent that impacts on their ability to study. Another problem is that parents who study miss out on In Work Tax Credits. The report also notes that the true extent of the problem may be bigger, as the worst hit students are likely locked out of completing their degrees altogether and have fallen off the radar.
I was invited to speak on the panel at the launch of this report on 3 August, as a student and parent, alongside Linsey Higgins from NZUSA, Labour MP Jenny Salesa, Green MP Gareth Hughes, and chaired by student Jordan Margetts, editor of Craccum in 2015. The Auckland University case room was full, as Lin summarised the key findings of the report, followed by a short talk from each panel guest and then a vigorous discussion.
The attentive audience asked some hard questions, and squeezed out of Labour and Greens an admission of oversight in Labour’s proposed ‘free tertiary’ policy, which fails to address the lack of a student allowance for postgraduate study, a factor that further widens the economic gap. The only option is to add living costs to your loan, but the maximum you can borrow is $176 a week, which a monk couldn’t survive on in Auckland, meaning students are forced to work while studying fulltime, or fit part-time study around their work. The question becomes one not just of access, but also of the quality of the education. Mental health services at Auckland University currently can’t keep up with demand. The report also found that 90% of students have some secondary form of debt, such as overdraft, credit card or personal loan, to keep on top of living costs.
A question from a student in the audience: “How would the government pay for it?” was a welcome opportunity for me to challenge the received wisdom that there’s a shortage of money and we all have to tighten our belts. I suggested tightening the belts of the mega rich, whose taxes were slashed at precisely the time that tertiary fees were introduced; a financial transactions tax alone would pay for it. Lin also noted the obsession of governments with having to “balance their budgets” when deficit spending should be considered if it is a worthwhile investment. The issue is not simply financial, it is one of priorities and whether there is the political will for change.
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If only I had an interest free loan to start my business all those years ago…it would have made investment decisions on plant & equipment and staffing issues a lot easier, that’s for sure.
But instead of that, I had to borrow on the open market and pay commercial interest rates and if my business succeeded (it did) I would be better off than the average wage earner so it would be greedy of me to expect a subsidy on interest payments at the taxpayers expense. That would be unfair.
Who told me that? Our (at the time) local Labour MP.
Sounds like something Phil Goff would think.
Do countries want their youth to succeed? In NZ fundamentally they don’t. The government and business don’t want to ‘waste’ their time and money on training young workers, they don’t want to ‘waste’ our money on educating our youth, they don’t want to ‘waste’ money on scholarships to help gifted youth, they would prefer to bring in offshore workers and students to save a buck. It seems to be a global neoliberal issue, as Jill Klein, says what sort of society starts cannibalising their youth, it is not sustainable?
If you had had an interest free loan, the commercial foreign owned bank you borrowed from would have taken less of your profits off shore. Instead those profits could have gone to your employees.
This interest fee loan would not have been subsidised by the tax payer at all.
Who was this idiot? Is he/she still a Labour MP?
No, not any more. A long standing Labour MP held in high regard by his supporters who goes by the name of Jim Sutton
What do you mean ‘if I had an interest free loan it would not be subsidised by the taxpayer’?
There is no such thing as a free lunch and certainly no such thing as a grant or subsidy paid to one person that doesn’t directly cost another
Students shouldn’t have to take out loans to get an education. In fact, we should be working to ensure that education is freely available to everyone and that they’re not made worse off by getting one because society is better off having an educated populace.
And it doesn’t cost anyone anything to do so. What it means is that something won’t be done because there won’t be the resources available to do them as those resources are being used to do something else.
It’s a question of priorities – not cost.
We do what gives us the rewards we desire. There is no need to convince me that education is a good investment.
NZ is full of people who recognise a good investment and act on it. They raise the capital, by borrowing if necessary, and if the investment is a good one, they reap the rewards.
But in your opinion, education is different, students need ‘special’ treatment. Why? Because some students make poor decisions. Agriculture and commerce degrees pay well, arts degrees generally not so well. Medical degrees generally pay well, a degree in hip-hop dancing not well.
Yes, education is a good investment, in most cases. By the way, a student loan only covers approx 15% of the cost of the the course. Therefore we are already at the stage that “something won’t be done” as the taxpayer already works to subsidise the average student by a whopping 85%!
Actually, only sociopaths act that way.
The rest of humanity tends towards the creative anyway because otherwise life would be boring. This creative urge of the majority of people is then exploited by the rich to make themselves richer.
The thing about education is that it’s a social investment by society in it’s people that benefits all of society. This benefit accrues no matter what the sociopaths are paying for that work.
Drive: The surprising truth about what motivates us
Money isn’t the problem. It’s the poor value systems of the rich and selfish.
and what year was that mike? please tell…
1988
How about if the government gave you a loan at negative interest rate (paid you to borrow money)? That would make investment decisions a lot easier wouldn’t it?
How about if the government gave you tax exemption for starting a company or relocating to a ‘development’ region? That would make investment decisions a lot easier, wouldn’t it?
How about if the government sold you a national asset for well below its true value and encouraged you to loot from it? That would make investment decisions a lot easier, wouldn’t it?
How about if the government agreed to promote your business on the basis of money you donated to party funds? That would make investment decisions a lot easier, wouldn’t it?
How about if the local council took money from ratepayers and spent it promoting your business? That would make investment decisions a lot easier, wouldn’t it?
By the way, that’s exactly how business is done in NZ.
On the other hand, those who cannot get their snouts into the public feeding trough have to continually subsidise those who can.
You’re wierd. I refuse to lower myself to your level in order to reply.
Weird? Oh, you mean carefully observing and seeing things as they are -a completely rigged game- instead of automatically believing the lies promulgated by politicians and the media.
I suppose in a society of uninformed fools who don’t know the first thing about the system and who refuse to do any research that is a bit weird.
No, Wierd as in the rantings of a conspiracy theorist, a “hater and wrecker”.
Let’s put all that aside and partake in reasoned debate
He described what actually happens and you get upset about it.
What I’m “upset” about is that we are supposed to be debating the relevance and affordability of student loans, and the previous correspondent has strayed waaay off topic to a wierd rant and conspiracy theory.
It makes the writer appear rather…umm..unhinged
The formatting in this post is broken.
Hobbling the young to debt for an education that they can only truely take advantage of if they emigrate, an education that was afforded the hobble-ors free by earlier tax payers, is not only an irony of the darkest kind but rouses idiot logical fallacies from the likes of Mike@NZ who’s abysmally un original opinions are as original as his eagerness to tell everyone how brilliant he was/is.
Well, @ MIKE @ NZ. Good for you. Well done. Go you. You’re wonderful. You might even be as wonderful as you think you are. Now, have a cup of tea and a wee sit down.
Sounds like it may be you, Mr Countryboy, who may need the cuppa and a wee lie down more than I!
A higher education is a good investment in most cases, and the degree will pay for itself.
The point of my post is this. What of the people who decide to go into business straight out of high school and draw down a big mortgage to do so? They become the poor struggling taxpayers expected to support (subsidise) university students, of which the majority are from middle class and higher families, students whose wages and salaries will in most cases eventually outpace that of the taxpayer on commercial interest rates.
You may look at interest free student loans or ‘free’ tertiary education as assistance for students, but I see it as an unfair burden on the struggling taxpayer.
“an active and informed democracy”, with graduates being more politically engaged and more likely to vote.
Got to agree with you there Sian, it is endemic that this Junta is actively pursuing the poor and students to force them to become economic slaves to money leading institutions now perhaps all run by their shady mates?
The real slaves are, and have always been, the Middle class taxpayers and small businesses
Having just read the report by Max Lin, I utterly applaud the recommendations put forward at its conclusion. It is the least that could be done in this ridiculous world both Labour and National neoliberalists have inflicted upon us. A pox on both their houses, and upon Winston Peters for that matter, who supported National at a crucial moment when Labour did attempt to repair some of the damage of the Student Loans Scheme.
But I would like to appeal to the wiser heads of CPAG, and the expertise of the likes of Susan St John maybe, to examine the total or at least partial right off of student debt entirely. To end the SLS completely. What would it take as a nation to return to full and free education, and what if anything would that debt write-off do to the economy really? Given Government debt is an entirely different concept to Household debt, that analogy simply does not hold water.
Or as mentioned above “I suggested tightening the belts of the mega rich, whose taxes were slashed at precisely the time that tertiary fees were introduced; a financial transactions tax alone would pay for it.” Yay!!!!!
The upper 10-20% have had a pretty good ride over the last 30 years, time for some “Trickle Down” in the form of redistributive (or progressive) taxation. And why is a financial transaction tax almost ignored by Treasury (in 2001 at least) by saying “We do not support the introduction of a financial transaction tax, first, because of harmful cascading effects (what does that mean??), and secondly, because we do not consider it a superior substitute for GST.” (ie a broad based taxation system -GST- which hurts the poorest of us most, over a tax system taxing the richest of us -FTT?) … must be an excellent idea then, if Treasury dismisses it!
Absolutely loved Michael Moore’s latest documentary “Where to Invade Next”, especially the example of Slovenia and free education. The students forced the government to abolish a Student Loans Scheme there. An uprising is needed here to do the same. It is an idea whose time has come. What would happen if students caused Universities to stop for just one day. No Student Debt! Maybe our brightest minds would think that wasn’t so hard we could do it again … until Student Debt was no more! And if we all turned our minds to so many of the issues resulting from that damned neoliberal experiment … Imagine a brighter future without these people screwing our lives.
‘a financial transactions tax alone would pay for it;
That was one of the major policies of the Direct Democracy Party (around 2005).
Direct Democracy was crushed by the forces of status quo (primarily Labour and National and their corporate friends) in this so-called democratic system, and by the stupidity of the voters who continued to vote for banker-instigated debt slavery.
Go back further. Social Credit was also crushed by the forces of status quo.
Go back to the Values Party -which promoted economic, social and environmental justice and which got hijacked and got morphed into the business-as-usual Green Party.
This crushing of independence movements and justice movements has been going on for centuries and one thing has become abundantly clear: any attempt to thwart the power of banks and corporations will be crushed. It has to be that way because very existence of banks and corporations is dependent on the general populace NOT knowing the truth and NOT being free of them.
Humanity took several wrong turns centuries ago and there is no fixing it at this late stage.
Therefore, expect everything to continue to made worse [by banks, corporations and their agents in legislative houses and bureaucracies throughout the world] until the system collapses under the weight of its own inherent defects, corruption and the damage it does. Or collapses via a major war.
During the collapse phase expect attempts at ever-greater social control via surveillance and repression.
‘must be an excellent idea then, if Treasury dismisses it!’
Absolutely. Treasury’s role is to maintain status quo inequity, not improve social conditions.
By the way, don’t forget that the last time there was a major push against the system by students in America several were shot dead by ‘security forces’.
Poverty is indeed linked to education but not in the way you think:
Poor, uneducated parents are more likely to produce poor, uneducated children. This is not because they don’t have access to tertiary education but because all too often they the parents are illiterate or semi-literate.
(For example, approx. 50% of NZ prison occupants are illiterate. Fix that and maybe we will need to incarcerate fewer people.)
So no amount of free student loans will help these people because they didn’t gain the basic tools in primary school. The education system failed them completely.
Since NZ is a place where a tradesman can earn a good living it is not essential for poor people to attend university to get them out of their rut – decent primary and high school education and a trade will do just fine. So let’s start there eh?
Free student loans will mostly benefit the middle and upper classes.
My Dad used to say “your attitude determines your altitude”.
Years ago when my wife left high school armed with UE and a desire to further her learning, her parents, mainly her Dad, told her one day “don’t bother going to university. Just go out and get a job”. He then put his foot down and told her she is NOT going to university. He thought a regular wage was more important. Not a good wage, a regular wage.
That is her life’s regret. Her father was a farm worker from a working class family. None of the family had a higher education, so based on a lack of information and experience, they devalued a degree.
It saddens me. On the one hand we have kids with little opportunity for a university education while we also have kids clogging up the universities doing ‘degrees’ such as hip-hop and interpretative dance who have been misled into thinking that any degree is a good one.
Mike: You’re quite correct. It would be interesting to see just how many degrees offered today in NZ have a positive financial return for the person investing in them.
Obviously most the arts and social science degrees offer little or no financial benefit but I also know more than a few science Ph.Ds in who are still battling along on low wages who will never catch up with the kid who left school as early as possible and became a chippy or plumber.
If you’re interested in ‘The Future of Work’ I strongly recommend this book:
‘Shop Class as Soulcraft’
https://www.amazon.com/Shop-Class-Soulcraft-Inquiry-Value/dp/0143117467
Oh look. It’s a coalition of the stupid. Firstly education is not an investment it is a public good.
Secound. New Zealand does not operate its budget the way this coalition of the stupid think it does because total expenditure equals total income. You try to link individual income with fiscal policy which is wrong.
Individuals have an independence between there income and spending so if the individual cuts his spending his income doesn’t change.
But. If the country as a whole goes into a major repayment spree then it’s total income is going to go down.
The coalition of the stupids thought experiments are not a very good model in which to base this countries fiscal policy.
Firstly, total expenditure does not equal total income. NZ had a current account trade deficit in the last quarter of approx $510m. That shortfall will no doubt be made up through current account borrowing. Actual budget surpluses in this country are rare, although they are regularly promised by various governments on budget night mostly to happen in 4-7 years time.
Education is an investment, a collective investment in NZs case, as we have chosen for better or worse to socialise education, which I guess is where your ‘public good’ idea comes from. Just because in the mind of a socialist it is deemed ‘good for the public’, it is not necessarily a public good.
Oh look. The coalition of the stupid has sent force there spokesperson to speak?
And the stupid have spoken.
And the stupid say if we have a trade deficit that that dosnt effect totally but the short fall will be made up with boring which again. Has no correlation with total income.
Fucking genius
SAM: I knew this would come up.
I suggest you take a look at the title of this article: It’s about alleviating poverty, not some arty-farty idea about ‘public good’.
How the hell can a child born in poverty drag themselves out of it if they can’t even read & write?
I repeat: Free tertiary education will only benefit the middle and upper classes because they are the only ones who can reliably access it.
Let me conect the dots for the coalition of the stupid.
-If central banks across the world have coordinated policy to lower interest rates then there can be no yield because.
-If there’s no yield there can be no return on investment. If there is no return on investments then there are no profits.
-If there’s no profits then private institutions run off of public good.
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