Tuesday, April 19, 2005

New Zealand in "Most Expensive Place to Study" Shock

Ha! According to this article , New Zealand is the most expensive place in the Western world, behind Japan, to undertake university study. An independent study has established that, once the cost of living and the amount of support that comes in the form of loans is factored in, NZ easily beats out supposedly expensive places like the U.S.

I knew there was a reason why I spent good parts of my honours year eating a cup of rice per day and still got saddled with a loan that was growing faster than I could pay it off for my first two years as a hard-working public functionary...

And this comparison is made in today's environment, where students and their families know what to expect, and those currently studying are exempted from paying interest on their loans. I started studying in 1990, against the background of a long history of minimal fees and a universal student allowance. The next year, without any warning, the government allowed fees to increase tenfold and dumped student allowances. But financial support was still available - just sign up for a loan! The catch was that we started paying interest from day one, at a fixed rate of 8%, which for much of the intervening time has been above the market rate. By the time I finished my degree, I'd already been charged thousands of dollars in interest.

Meanwhile, the University Bursary and Scholarship awards, which were originally intended to support high-achieving students, had been allowed to be frittered away to a pittance by inflation. I got an 'A' Bursary and four subject scholarships, which netted me a grand total of $200, almost enough for a couple of textbooks.

My time at university spanned from 1990-94. It wasn't until 1999, with a change of government, that the system was reformed somewhat, with interest rate exemptions and write-offs, and the reintroduction of genuine rewards for doing well at school (I believe a subject scholarship is now worth about $1,000).

Am I bitter and twisted? Hell no. There's no point fretting about the time and place you were born into; we're still amongst the most 0.0000001% most privileged people to have ever lived, as Simon Doherty is fond of saying. And I've never exactly been stopped from doing anything I wanted to do. If I hadn't taken off to travel for 3 years, my loan wouldn't have compounded quite so much or so quickly. Although on the other hand if I'd taken my supervisor's advice and gone off to do a PhD in Philosophy in Indiana it would have grown just the same.

But the revelation that, compared to our OECD cousins, life as a student really is quite tough, makes me feel a bit less guilty about some things. Like quitting my 20-hour per week job at the gas station with its miraculously entrenched penal rates ($13.50 an hour on Sundays!) towards the end of my third year of study. After all, I had worked there four years, and 20 hours a week is substantial - my grades did actually improve afterwards.

It could be argued that NZ only appears to be more expensive than places like the U.S. because the comparison is with public universities. And to get a good education in America you have to pay exorbitant fees for somewhere private, right? Whereas in NZ all the public universities are of a "good standard". Well, I can't speak for the quality of the state universities in the U.S. (though I understand that many of them are very good; my sister is studying law at one right now). But at the University of Canterbury when I was there, I can offer testimony that the English (first-hand) and Modern Languages (second-hand, from my sister) departments were both sub-par. If anyone learnt anything or was stimulated/challenged in stage III English, it certainly wasn't related to the classes. By contrast the Philosophy department, where I ended up doing Honours, was great :)

One more thing - this study is an international one, and I would say has been done principally at the spreadsheet level. It doesn't even take into account the actual conditions students have to live in while they study. There's no way they will have drilled down to the level of analysing:
-what kind of houses do students live inhabit in NZ (old rotting wooden ones)
-what direction do they face (south)
-what is the average temperature in, say, Christchurch, during the winter months (pretty damn cold)
-how much does it cost to properly heat one of these houses (more than students can afford).

OK, so it was never exactly like being a campesino in Juliaca, but the more I think about this, the more self-righteously indignant I get. Could the level of genuine difficulty in getting by be an excuse for why I didn't advance in any sporting, social or cultural fields when I was at university, and didn't really achieve anything apart from passing my courses?

It could be, if it wasn't for the beer...


Anonymous said...

The whole issue of student loans and debts has been poorly handled right from the beginning. The students who were hit with it when it first came in have been severely disadvantaged but no acknowledgement has ever been given that they had more punitive conditions than those that exist now. What about the excellent opportunity to bring in loan rebates or write-offs in exchange for working in underserved areas. Would solve the problem of health professionals in rural areas quite efficiently, benefit the country as well as the individual. But that is obviously far to obvious and sensible to be considered. And on a bizarre personal note, my daughter who has a young baby is being hounded by IRD for an extra payment of almost $2000 this year based on self-employed income she earned two years ago. The whole system is completely nuts!

Simon Doherty said...

Go on! Be bitter! No human can sustain a perspective on their life that encompasses 100,000 years of human history! Not even the Il Papa.

But seriously, the study you describe is very interesting. Especially when you consider that a substantial number of tertiary institutions in New Zealand are now private, profit making companies offering expensive courses of dubious value to young students who pay for them by obtaining a no-questions-asked loan from the government. Cui bono?

That was a very long sentence. I'm becoming almost as verbose as you are. Too much beer, probably.

bob the mackerel said...

Cui bono? It's always the Freemasons, innit?

Simon Bidwell said...

Hey, Freemasons are actually the good guys - haven't you read the da Vinci Code? Any dark rumours about them being a shady, powermongering cult are clearly Opus Dei propaganda...

Tim said...

Thanks for that Simon

I didn't know there used to be a universal student allowance.
What were the reasons given at the time for scrapping it?

I recently had the somewhat similar experience of getting shafted by the government - the legislation goes like this: (read - rant to follow)

If you are over 25 you automatically get student allowance, if you are under 25 you are subject to a parental income test.

Last year, you got an exemption from the parental income test if you had been living away from home, supporting yourself for two years - this is called the Independent Circumstances Allowance (ICA).

This year, they scrapped the ICA on the grounds that paraphrasing:
It is discriminating against people based on their previous work history and is thus inconsistent with the Human Rights Act (HRA) / Bill of rights

I was getting the ICA last year and now need to get a loan to pay for myself to live which will double my student loan.

Applying 10ns of critical thought to their reasons, I see a few problems:

1) The HRA doesn't say anything about discriminating against people based on their previous work history - if this were the case then an employer would not be able to hire someone on the grounds of experience

2) Even if it were the case that the HRA did say this, it would still not be discriminating based on work history, it would be discriminating based on assistance received and independence from your parents which is reasonable.

3) The ICA was actually serving to make the student allowance scheme conform to the real part of the HRA which says that you can't discriminate against people based on their Age so that the scheme is now blatantly breaching the HRA.

Of course no critical thought was given to this in the media because the press release was headed with the annoucement: "More people to get student allowance" because they raised the parental income test threshold a few thousand dollars (probably only just met inflation) and the removal of the ICA was treated more as a footnote.

The government always announce things which would be controversial as footnotes to non controversial things that everyone agrees with - it is a disgusting abuse of 'democracy' (though I am past being suprised by this now).

It is very aggravating to continuously hear things like: 'There is simply not enough money to support all students' and 'There is a real shortage of skilled workers in NZ at the moment' and 'Corporate profits are way up this quarter, the economy is doing great'. It doesn't take a genius to put this all together...

Simon Bidwell said...

Tim - the universal allowance was scrapped in 1989-90 as part of a whole suite of "reforms". The rationale was that "the country simply can't afford to go on subsidising everybody to study - from now on all assistance will be 'targeted' "

I didn't know about scrapping the independent circumstances allowance because it "discriminated on the basis of work history". Is that for real? It sounds like a joke.

The contradictory thing when I was studying was that you could get the allowance if you were under 25 but *married* (uh, because that meant you were, like more mature? Or because a husband would have to support his wife??). This led some people to have sham marriages, partly to get the money and partly to mock the stupidity of the rule.

Tim said...

Simon says: (hehe)
I didn't know about scrapping the independent circumstances allowance because it "discriminated on the basis of work history". Is that for real? It sounds like a joke.

oh no, it is definitely for real i am on student loan now...

The part I am referring to is section 3.2 on page 8-page 9.
You can only get ICA if you have a 'family breakdown' or you are an orphan or something.

It is such a deceitful document - you can tell they know they are lying through their teeth trying to obfuscate what they are actually saying to make it sound better.

For example in section 2 they say Raising parental income thresholds will allow more
students to get full or partial allowances

then they say:

From 1 January 2005, parental income thresholds will be increased for the first time since 1992.

The maximum rate of Student Allowance has been adjusted annually for inflation for some time. Now that the thresholds are also adjusted annually for inflation, all Student Allowance rates will keep their value in real terms.

So what they are actually saying is - the threshold has been going down in real terms for the last 13 years and now we are going to compensate. Look how generous we are!!!

sophia said...

Yes, I remember the ICA and being unable to get it in my last year of study because I couldnt prove I had been paying rent (I withdrew the money and paid the head tenant cash instead of using an AP)even though I was in a different city from my parents (and therefore unlikely to be living with them). A friend in a similar situation sought legal advice and got her allowance eventually, but after much drama. I just try and forget my loan. Despite making small voluntary repayments over the last 18 months I apparently still owe the IRD large amounts in overdue repayments.

Tim said...

Hey by the way Simon, did you get my email? I posted an entry to my blog last night on philosophy of mind that you might be interested in...

Unfortunately you need to sign up for a GNN account if you want to comment (only takes a couple of minutes though). You could of course email me if you dont want to do that but still want to comment on it.

Cecilia said...

Some comments on comparison between the NZ and US systems. Obviously it's kind of hard to compare the two given the huge difference in population, but here are some general observations.

One key difference is that in the US not everyone can go anywhere by any stretch of the imagination. It's is extraordinarily hard to get into schools like Harvard or Yale. That being said, if you do get in, your future is paved with gold. Alternatively, if you are that kind of student you might choose to instead take the full scholarship you got offered at the slightly less but still extremely prestigious school. So, in other words, the 'system' favors the brilliant student. If you had the equivalent of your Bursary scores here, Simon, you would have had the Ivy Leaguers clamoring all over you and your choice of a free ride at numerous other highly regarded institutions. For example, on account of my pretty respectable entrance score for law school, I got offered two full and several partial scholarships by several law schools (I ended up turning them all down and paying full tuition at a higher ranked school). Oh, and by the way, Simon Doherty, yes I still remember that you scored 3 points higher than me in Bursary:)

Also, not all private schools are great and many public schools are. There is also a huge variation within the public universities. Here in Fla. I am fortunate enough to be at University of Florida in Gainesville which is nationally a very highly regarded and reputable university, though obviously not exactly Harvard. As an undergrad it's not really easy to get into though not super hard either. Other public universities in Fla. don't enjoy the same reputation and are much easier to get into, though all cost the same. As an instate resident, tuition is really low, so many kids who could otherwise go to a much more prestigious school, chose to go here and incur much less or no debt. The law school here, for example, is hard to get into - only a 13% acceptance rate - partly on account of the incredibly low tuition. I guess my main feeling is that there are more options here about how much debt you want to take on.

Couple of other things:

There are all kinds of scholarships available if you are even halfway smart.

The standard of student accomodation is substantially higher than what I lived in when I was in NZ.

The Modern Languages department was indeed universally bad at Canterbury - with the possible exception of 1 or 2 people. Just generally low standards and uninspired, insipid teaching. Sometimes I feel that my BA is barely worth the paper it's printed on.