NZ Herald on student loans

May 8th, 2012 at 10:00 am by David Farrar

The Herald editorial yesterday:

More than 40 per cent of the money that the Government puts into tertiary education goes directly to students as allowances, loans and interest subsidies. The average for such spending in OECD countries is close to 18 per cent. 

Steven Joyce said we have the most generous student support scheme in the world, except maybe Scandinavia.  We also have the most generous pension scheme in the world, as it has no income testing and no asset testing and is linked to the average wage.

The Prime Minister says the changes will be “modest”. That is as it must be. A sluggish economy would be done no favours if the repayment of loans became so onerous that graduates could not afford to take out mortgages and suchlike. Or if students denied allowances responded by taking on a great deal more debt. Modest adjustments ensure students and graduates will not be subjected to serious hardship. It says much for the scale of the spending, however, that such relatively small steps will save the Government tens of millions of dollars.

John Key says this saving will be reinvested in the research and teaching capabilities of universities to help raise their world rankings. That represents a change of tack. Previously, the Government had talked of transferring this money to universities to fund tuition for more students.

Not before time, it has recognised that something must be done about the sliding international ratings of the country’s universities, and that the throwing open of entry to them has been an important factor in this.

Also pleased to see Steven Joyce plans changes to the PBRF.

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5 Responses to “NZ Herald on student loans”

  1. Rob F (7 comments) says:

    “John Key says this saving will be reinvested in the research and teaching capabilities of universities to help raise their world rankings. That represents a change of tack.”

    This is fantastic news for research in NZ and hopefully this change of tack will continue and be stronger. Why should all our research dollar go into facilitating loans, of which most I believe are under $20g and for courses that do not lead directly into a profession? Let’s tighten those screws and give the proceeds to the scientists I say (from my completely biased point of view of course ;) )!

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  2. simonway (387 comments) says:

    More than 40 per cent of the money that the Government puts into tertiary education goes directly to students as allowances, loans and interest subsidies. The average for such spending in OECD countries is close to 18 per cent.

    As far as I can tell, this is an extraordinarily misleading and deceptive claim, because in countries that subsidise tuition to a greater degree, that subsidy isn’t counted as money going “directly” to students. So if we eliminated student loans entirely and just had free tertiary education, we would have a “less generous” system.

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  3. Rick Rowling (816 comments) says:

    Come on law school graduates!

    Fight for your right to keep your interest costs paid for by the taxes of forestry workers and cleaners!

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  4. Scott Chris (6,178 comments) says:

    More than 40 per cent of the money that the Government puts into tertiary education goes directly to students as allowances, loans and interest subsidies.

    Unbalanced crappy reporting. (Be nice to know who the unbalanced crappy reporter is, but the author’s name isn’t given). You can’t lump together a fixed cost and a recoverable cost in a meaningful sum and then compare that ‘cost’ to other costs that are quantified differently.

    Perhaps this OECD report on the cost of tertiary education which compares amongst other things the proportion of private verses public contribution to tertiary education would be more illuminating – at least for those who wish to be informed.

    Y’see, that’s the difference between fact and spin.

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  5. Paul Williams (880 comments) says:

    I’m not sure on whether I agree the Minister’s claim. I suspect the Australia system is competitive but it’s probably arguable both ways.

    Regardless, I think the NZ system is in desparate need of comprehensive reform (and not, as David might think I’d argue, simply in favour of full funding).

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