BUDGET 2010 : Few surprises for the tertiary sector.

by Gregor Whyte | 4:11 pm 11/07/2010

Students were not lead to expect much from last week’s Budget announcement and it turned out to be as boring and lacklustre as expected with all the main points signalled ahead of time.

The big news for students was a raft of changes to the student loans and allowances programmes, mainly designed to save money by cutting off loans to underachieving or perpetual students, and to recoup more of the cost of administering the scheme through increased administrative fees. 

The most radical change was the imposition of standards which mean that students who fail more than half of their papers over the course of their first 1.6 Equivalent Full Time Student (EFTS) units will have their ability to borrow from the student loan programme cut. A fulltime student would normally complete between 0.8-1.2 EFTS units a year. If a student is cut off they would be able to regain access to the loan scheme by passing at least half their papers taken without using government loans.

“When students take out a student loan, but fail to gain a qualification, they incur costs for themselves and for the government without any real gain,” Tertiary Education Minister Steven Joyce says.

Another major measure is limiting access to loans to a period of seven EFTS units. Students who wish to continue studying beyond this time would be required to fund their own study. Exemptions would again be available for some groups, including those going on to postgraduate and doctoral study.

A further measure to limit access to the scheme is the new requirement that permanent residents and Australian citizens wishing to study in New Zealand will have to complete a two-year ‘stand down’ period before they will be allowed access to student loans. Exemption will exist for certain groups such as refugees.

In terms of recouping the cost of administering the scheme, two measures were adopted. Firstly the fee associated with borrowing every year is to be increased from $50 to $60, and re-titled the Student Loan Establishment Fee. Secondly there will be an annual fee of $40 charged to every person with an outstanding loan balance.

Other measures are likely to have a less widely-felt impact, but include the removal of exemptions for Tertiary Transition courses from the 200-week allowance limit, and the removal of the ability to claim Superannuation (or a Veteran’s Pension) and the allowance concurrently.

The news, however, was not so grim in other areas of the Education Budget. The Budget provides for an increased number of tertiary education places, 1735 of these at universities and 3173 at polytechnics. There will also be greater subsidies per place.

In addition, the fee maxima will be replaced with an ‘annual maximum fee movement’, which will cap fee increases for all courses at four percent per annum.

Many post-Budget headlines were dominated by news of the GST hike. Student Allowances will raise by 2.02 percent to compensate for this.

OUSA President Harriet Geoghegan says the Budget amounted to shifting the same money around. “[The changes] aren’t really a good thing or a bad thing.”

Geoghegan reflected that in one sense the changes are not as bad as had been expected, but still ultimately limited access to tertiary education for some, and failed to make available the funding necessary to address problems in the sector.

“This Budget still hasn’t addressed the problem of universities not having enough money to pay for places for all those who want to study.”

NZUSA co-president David Do was disappointed with the lack of direction for the tertiary sector. “It has failed to meaningfully tackle the real issues of underfunding and student debt,” says Do.

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