David Clark | Issue 19

David Clark | Issue 19

Food for Thought

As a student, I ate a lot of instant noodles. Carbohydrates are cheap. In one flat, we budgeted two packs of spaghetti between four for a meal. Filling, but not too pricey. If we had lentils on top — instead of mince — we could afford a recognisable cut of meat the next night. Unfortunately, budgets have got tighter still since I was a student.

More than twice as many students are in financial hardship compared to 2012 according to a NZUSA survey. The survey found that nearly 44 percent of full-time students didn’t have enough money to meet basic needs. It also reported that one in five students drops out of study for financial reasons, now the leading cause after finishing a course or finding a job.

Rising education costs restrict opportunity for many. The cost to students of tertiary education has continued to go up, but governments have not raised incomes commensurately.

Those with savings or sponsors access tertiary education. Those without do not. In part, the effect is direct; people from poorer families generally struggle to save when parents are demanding rent from them to meet bills or pay for the education of younger siblings. And in part it is a perception issue; people are generally nervous about borrowing. But research shows people from straitened backgrounds are more debt-averse than everyone else. This frequently contributes to the decision to opt for wages today rather than a salary tomorrow.

The best predictor of a student’s level of tertiary achievement is their mother’s level of education. The father’s education is the second-best predictor, and that’s followed by the influence of teachers and tertiary-educated mentors and relatives. Role modelling + debt-aversity = stacked odds against bright students from lower socio-economic backgrounds accessing tertiary education opportunities.

Education raises people out of poverty; it supports a better society. But even dry economists should embrace free education. The work of Nobel laureate economist James Heckman suggests it is efficient for governments to deliver full tertiary scholarships for all top students from lower socio-economic backgrounds — since personal gain for them and their families also represents an otherwise absent net gain in GDP for the country concerned.

This article first appeared in Issue 19, 2015.
Posted 2:43pm Sunday 9th August 2015 by David Clark.