Why increasing student debt is not a support package.
April 21, 2020
A tertiary support package has been announced by the government in an effort to help students financially struggling due to Covid-19. However, Isabella Lenihan-Ikin, president of the New Zealand Union of Students’ Associations, argues that the new measures are simply not enough.
Last week the government announced a Covid-19 support package for tertiary students. It includes raising the amount of course-related costs for domestic full-time students from $1,000 to $2,000 and technical changes to tuition fee refunds and fees-free eligibility. This package does not address the pressing financial hardship that students face – increasing student debt is not a support package.
In announcing the tertiary support package, Jacinda Ardern said “education will be key to our economic recovery”. This echoes a statement she made in the weeks leading up to the 2017 general election. “When you are trained and educated, that benefits all of us, and the New Zealand economy as a whole.”
This statement was made as part of an education announcement at my old high school, Ngā Puna o Waiōrea Western Springs College in Auckland. Although by that stage, I was in my third year of university and studying at my third tertiary provider after having already dropped in and out of tertiary education once.
The state education I received at high school was guided by the idea that education provides the tools for students to share in the building of a just and sustainable society. The idea that education is a public good. This simply means that the benefits of education aren’t worn by the students alone, but also their whānau, community and nation too. In relation to that, the burden of paying for education can’t be worn by the student alone but increasingly, it is.
We’re still waiting on the postgraduate student allowance, and the government (and opposition) have both implied we won’t see fees-free being rolled out beyond the first year due to the success of it being measured by the number of students going into tertiary education (despite that never being the purpose of the policy). And while the government did increase student allowances by $50 per week, landlords sucked most of this up.
As Ardern made clear in her 2017 speech, week-to-week expenses are a significant barrier to many people beginning or continuing to study. During this unprecedented lockdown, students are living off insufficient government support to cover weekly expenses. Not only are students being forced to decide whether to heat their flats or buy food, but they’re also being forced to decide whether to continue studying or go on the job-seeker support benefit which has been recently increased by $25 per week.
There are two ways that students can access weekly financial support from the government: student allowance and living costs. Student allowance is available only to a limited number of students (approximately 33%) and is not added to a student’s loan. The criteria for students being able to access the student allowance is very stringent – it’s available only to undergraduate students and is means-tested against the parental income of the student until they are 24 years old.
This provision assumes that students younger than 24 whose parents have a combined income above the threshold amount are receiving parental support. But there are a number of reasons why this assumption is wrong. Firstly, as housing and other costs for families are increasing, the parents of high-school leavers are increasingly likely to be carrying their own debt and are therefore unable to support their children in tertiary education. Secondly, this provision discriminates against students who come from large families. Statistically, Māori and Pasifika people have larger families and therefore this situation is exacerbated even further.
Living costs, on the other hand, is added to a student’s loan. The maximum weekly amount is $239.76 per week. In Wellington, average rent for a room in a three-bedroom flat is $215 per week. This leaves $24.76 for other essential costs: power, food, transport and healthcare. Therefore, working alongside full-time study is necessary for students just to get by week to week. Although paid work is required for students to survive, the casualisation of labour and precarious employment conditions add to the vulnerability that students face. And many of these jobs have disappeared overnight, too early for students to be rehired by their employer to qualify for the wage subsidy.
The combination of limited government support and unavailable parental support has led to the spiralling of student debt (which now surpasses $16 billion) and increased student poverty.
Then the pandemic hit.
The factors that put students into poverty in normal times have only been exacerbated during the lockdown. One student says: “I don’t know what to do, I’m barely managing to pay my rent, I can’t pay power, I can’t afford nutritional food, I can’t even afford to buy warm clothes now that it’s getting colder. I don’t have much in the way of clothes as it is and most don’t fit me anymore. I spend more time in bed trying to keep warm because of lack of clothes and not being able to afford power.”
Despite the current situation being dire for existing students, the announcement on Tuesday will not fix the inequity that has been revealed and heightened by Covid-19. It will not challenge the individualisation of politics that Ardern herself believes has failed us. What is required to invest in the future of this country is a universal student allowance.
Secretary of Education Iona Holsted said Covid-19 has revealed the inequity in our system, not created it. During this lockdown, one of the causes of this inequity is that students remain the only group of New Zealanders who are expected to borrow to live. This is unfair at the best of times, let alone during a global pandemic leading into the harshest economic recession since the great depression.
In a 2018 speech, Ardern made the plea that students are needed to “help us take on some of our greatest challenges” as a nation. Covid-19 has presented itself as one of the greatest challenges of our generation. Jacinda, I reverse this plea on behalf of all students. We need you.
This article originally appeared in The Spinoff