HOT TOPIC
Student loans - an investment for New Zealand's
future
August 2003
Bank of New Zealand chief economist Tony Alexander has described anti-student-loan outrage as "ill-founded hysteria whipped up by students because they don't want to pay".
London
School of Economics (LSE) researcher Nicholas Barr earlier this month
called tax-payer subsidies on higher education beyond a certain point
as "like subsidising champagne - nice for those who can get it, but
not what the budget is for".
Education Forum policy advisor Norman LaRocque has said that if it is unfair on students to pay for their education, then "why is it fair on the taxpayer when we know that the average taxpayer is poorer, by a considerable margin, than a graduate".
Student
representatives, on the other hand, have repeatedly called for lower fees
and the scrapping of the loans scheme since it was started in 1992, and
have highlighted student debt and the so-called 'brain drain' as evidence
of the scheme's failing.
It's a controversial topic but serious, mature and rigorous debate is needed on how to best finance the tertiary education system when, in a country like New Zealand, the public spending pot is not deep.
A Dominion
Post feature article (21 June 2003), Learning
Curve, surveys the issue of student loans.
Fulbright
scholar Maureen McLaughlin, who studied New Zealand's tertiary education
sector in 2002, has argued that, "many New Zealanders still feel
that free tertiary education would provide the most access. However, evidence
in New Zealand and in other countries runs counter to this, as tertiary
participation has increased in New Zealand and many other countries at
the same time that costs increased for students and families."
Ms
McLaughlin's Fulbright
report has more information.
The LSE's Professor Barr argues that relying on taxation to fund tertiary education has at least three problems.
"First, paradoxically, it creates a shortage of resources. It is a tried-and-tested political reality that mass, good-quality higher education always loses out to the [national health system] and schools.
"Second,
tax funding in Britain has failed the poor. Last year only 15% of children
from poor families went to university, compared with 81% of the children
of professionals. In the US, where universities do charge fees, 43% of
those from the bottom quarter of the income distribution participate in
higher education.
"Third, tax funding redistributes towards the better-off. Beyond
a certain point, subsidising higher education is like subsidising champagne
- nice for those who can get it, but not what the budget is for."
A Guardian article gives more detail on Professor Barr's ideas.
Professor Barr presented a paper on student loans, Funding Higher Education: Policies for Access and Quality, to the British House of Commons Education and Skills Committee in April 2002.
An Education Forum report written this year by Norman LaRocque looks at tertiary education funding trends in New Zealand and overseas to find best practice policies for improving access to, and results from, tertiary education.
It shows a world-wide move toward greater private tertiary education financing through tuition fees, increased emphasis on student loans instead of grants and an increase in private education provision. A media release summarises the report.
The student loan scheme's annual report (to 31 June 2002) has the latest New Zealand data.
A Statistics New Zealand report gives integrated data on the scheme from 1997-2000.
The Ministry of Education's student loans web page has further information.
Inland Revenue also has student loans data near the bottom of this web page.
In mid-June, the government announced an extra $572,000 over four years to improve the information available on the student loan scheme. The announcement was in response to recommendations made following a review by the Auditor-General in 2000, which found shortcomings in the management of information about the student loan scheme.
In Australia, too, the cost of tertiary education has been of concern and when the Australian Budget was announced on 13 May many reforms were revealed for the tertiary education sector that placed it on a more market-based footing. It included increased emphasis on student loans as this article from The Australian explains.
State University of New York at Buffalo Professor of Higher and Comparative Education Bruce Johnstone has written much on student loans. Two of his papers can be accessed below:
