More on increasing support for tertiary education students

Chloe Swarbrick wrote what is essentially a follow-up to her earlier column on support for tertiary education students, in the New Zealand Herald earlier this week:

Across the political divide, it seems we can all agree that education is critical for the wellbeing and productivity of our country.

The problem is, we have very differing views on whether someone should have to carry a lifetime of debt or suffer immense poverty, for their right to learn...

Let's have a look at some of the things that have changed in the last 30 years, then.

Student debt didn't exist before the 1990s. Before I was born, the cost of access to tertiary education was a nominal fee – akin to, say, the administration costs for a passport – that nobody need take out a loan for.

By 2004, average domestic student fees in Aotearoa across tertiary education institutions were NZ$2367. By 2019, they had increased 81 per cent, to an average of $4294 per equivalent full-time earner.

In 1992, the year after student loans were introduced following the let-rip of free-market competition, the average borrowed per year per student was $3628; by 2019, it had increased by 172 per cent, to $9867.

In 1999, 62,748 students received the Student Allowance. In 2021, despite our population growing by a million, 61,068 – yes, fewer than in 1999 – received the Student Allowance.

In 1999, the average amount of Student Allowance received per eligible student was $4420. In 2021, it was $6641. Adjusted for inflation, which would bring the 1999 value to approximately $8265, the minority of students receiving the allowance in 2021 are $1600 worse off than their counterparts 20 years ago.

We all know costs haven't gone down in the meantime.

Swarbrick's column then turns to the lack of political power of students, due to voluntary student association membership. She won't get any argument from me on that point. Students should definitely belong to a union, to represent their interests. They arguably have even less power in dealing with the education institutions than employees have in dealing with employers.

However, there is a broader point about the costs of education, and it relates back to the point I made in this earlier post (which refers to Swarbrick's earlier column). Things have changed, even since I did my degrees as a 'mature student' in the 2000s. The cost of living is higher in real terms (so, not just because of inflation), and middle class parents cannot afford to cover the full cost of sending their child through tertiary education. So, we end up in a situation where tertiary students are saddled with debt accrued simply from covering the costs of living week-to-week. That fewer receive the student allowance (both in absolute terms, and proportional to the number of students) contributes to this.

We have created a system that essentially forces students to work while they study. That sounds pretty benign, but I'm not talking about a part-time job on weekends for beer money. We literally have students trying to fit in study around an essentially full-time job, because that is what it takes for them to pay their bills when they are ineligible for government support, or where even the student loan system doesn't provide enough to pay the bills (on top of generating a mountain of debt).

As I've noted before, work has seriously negative impacts on students' performance at university, and especially large impacts on students who are working full-time. How can we seriously expect to develop the human capital of our future workforce, when we put such barriers in the way? As I noted in my recent review of the excellent book by Goldin and Katz, The Race between Education and Technology:

...there are significant financial barriers that not only stop students from enrolling in university, but also prevent those who do enrol from succeeding to their full potential and maximising their education gains...

My earlier post on this point suggested that the government needs to think about how we support tertiary students. I suggests, as a starting point, we could consider paying them all an amount equal to the full-time minimum wage during term time. The cost of that would be a potentially-unsupportable (politically) $7.6 billion per year. Current student allowances amount to $680 million per year, and the majority of students are ineligible.

To focus solely on the cost of such a system is to miss the substantial benefits that tertiary education brings. Some of those benefits are private (higher future earnings), and that is the rationale for having students pay the vast majority of the full costs (including opportunity costs) of their education. However, there are substantial social benefits of tertiary education as well (which I touched on in my earlier post). Students therefore should not have to pay all of the costs of their education, because they don't capture all of the benefits. I don't think we have the balance right, but perhaps it is time to try and quantify it (and suggests a future research project).

Swarbrick's focus on students' bargaining power (through student unions) may not be misplaced. Students need to stand up and demand a better deal. But the rest of us, who also benefit from a more-educated population, need to support them as well.

Read more:

• We can (and should) support tertiary education students more