Rising education costs undermine our future

Written By: - Date published: 12:41 pm, May 5th, 2010 - 27 comments
Categories: class war, education - Tags:

The Right is all about short-term thinking. That’s why National has never understood the value of education. The First National Government, when faced with budget troubles responded by cutting the education budget and raising the school age to 6.

This latest National Government is attacking education at the other end. Fees are going up and now we learn they’re going to introduce a graduate fee. In an age where we know we need a more highly educated, more skilled workforce, this government is determined to make getting skills more expensive, more difficult.

You might say that $50 a year is a small thing. But it’s another discouragement for a young person who is looking at either going straight into low-skill, low-pay work or borrowing thousands to get some skills. The last thing we need to be doing is discouraging more people from going on to polytech or uni.

It will be the people at the margins, Maori and the poor, who are turned off getting further education by added costs like this. Another reason for the Maori Party to vote against the upcoming budget.

And if $50 is a relatively small thing for an individual, $15 million a year is a pittance to a $60 billion a year government.

This graduate fee is interest by another name. It shows that this is a visionless short-sighted government that can find hundreds of millions to shower on its rich mates but not a few million to help ensure that New Zealand has the skilled and educated people that it needs for a brighter future.

27 comments on “Rising education costs undermine our future ”

  • Comments are now closed

  1. Alwyn 1
    5 May 2010 at 1:11 pm

    You are entirely right. We should be doing our best to save our students from having to pay out for things they don’t really want.
    Perhaps we could start a campaign to make membership of the Student’s Unions voluntary and not force students to pay out hundreds of dollars each year if they don’t want to belong.
    This could prove a real votewinner for Labour or the Greens if they propose it.
    This would show that the left believe in freedom of association and for cutting costs from the students budget, not like the facist right wing of politics in this country.

    • Sam 1.1
      5 May 2010 at 9:54 pm

      You don’t really understand how student associations work nor what they do, do you? It’s kind of important to know this so you don’t go off on unrelated, unfounded attacks on systems that work very well and achieve what they set out to do on a fraction of the budget.

      If you hate it so much, piss off to Australia and see how well VSM works over there.

      (Protip: it doesn’t.)

  2. Lanthanide 2
    5 May 2010 at 1:20 pm

    You have to disagree with everything the government does, don’t you?

    I think the $50 fee is acceptable. I would much rather see a $100 fee that is waived if you make voluntary contributions >$500 year. I have written an email to Steven Joyce suggesting this; I’ll see if I get a reply. I’d also like to see the fee waived if you earned below the minimum repayment threshold (currently $19,084).

    Also part of the plan is to increase the fee on those currently studying from $50 to $60, which I disagree with. If anything I would like to see that fee scrapped.

    I would much rather see a $50-100 annual fee than any sort of interest rate being added to loans. If I have to choose between them (and we can’t live in a land of milk and honey) I would always pick the fixed fee. For myself with a small loan that’ll be gone in a couple of years from minimum salary payments, this fee accounts to only 0.5% on my loan balance. Saying it is “interest by another name” is really disingenuous, because interest cost rises as the principal does, while this fee is fixed, as you well know. Frankly $50/year is lower than many credit cards cost, and credit cards charge you 21% interest *as well* as their fee.

    Finally I’ll add that the interest free loans, while necessary, have probably swung a bit too far towards the generous end of the spectrum. At the moment there is little incentive to make any voluntary student loan payments; you yourself had a post when the 10% bonus was first unveiled showing that it really wasn’t worth much at all. My own excel sheet shows I will come out about $275 ahead if I save up my money and make a lump sum payment vs just saving the money and paying the minimum over time.

    While $15m may not be much to a $60b government, it is also a worthwhile saving if the government is in the red, as we currently are. Or would you rather see more public courses and programmes cut (like the youth rehabilitation one) to provide the extra revenue?

    • Bright Red 2.1
      5 May 2010 at 1:30 pm

      your plan is basically a pay off for the wealthy, Lan. Anyone who can afford voluntary repayments gets the 10% bonus on their repayments. Anyone who can’t gets another $100 added to their loan.

      Nice.

      • TightyRighty 2.1.1
        5 May 2010 at 1:59 pm

        so what you are basically advocating is that those people who save money and contribute voluntarily to repay some of the investement the government has made in their education should be penalised because of the actions of those who take the loan scheme for granted?

        • Maynard J 2.1.1.1
          5 May 2010 at 4:30 pm

          Ah, so if you are awash with cash and are lucky enough to pay in advance to get the governments rich graduate credit then you are a wonderful person “who save[s] money and contribute[s] voluntarily to repay some of the investement the government has made in their education”

          As opposed to being someone strugling to find employment after their study, or can’t make voluntary payments due to redundancy, low pay, changes in life (such as having children) – those people are scum who “take the loan scheme for granted”.

      • Lanthanide 2.1.2
        5 May 2010 at 2:11 pm

        Yes. Which is why the fee should be waived for those earning less than the minimum payment threshold of $19,084. Or perhaps tie it to the annual minimum wage instead – $26,520 by my calculation.

        If you are earning over that amount and can’t afford a $500 voluntary payment to waive the $100 fee, then I question why you have a student loan and how you expect to pay it off anyway. Frankly under my scheme those people would only be $50 worse off, which is hardly ‘bank-breaking’, but still providing a worthwhile incentive for those who can pay $500, to actually do so.

        I can easily afford to pay $500, but with the current 10% bonus there’s just no incentive for me to do so, it doesn’t make economic sense because I’m much better off just saving the money. Having a $100 fee that was waived would make it an effective 30% bonus, and I’d definitely pony up the money then.

    • ianmac 2.2
      5 May 2010 at 1:53 pm

      As I said to you before Lanthide, this is a paper sum of $50 as it goes on the bill and makes the total bill greater, not less.
      As James said, “To wit, the extra 10-15 million is an on paper transfer of money that represents the “emperors new clothes” of band-aids for any shortfall in “loan administration” costs. “

      • Lanthanide 2.2.1
        5 May 2010 at 2:06 pm

        Yes, and as I replied to you before, if you go with my scheme it means people will actually be giving the government at least $500 cash, not just increasing a number on paper.

        Although looking at it from an accounting perspective, the student loan is probably counted as part of the governments assets anyway. Sure it’s a number on paper, but if that number grows by $50, the government counts it as an asset even if they don’t have the money. Under my scheme, the number will be increased by $100 for some people, but for the rest the net number will actually be -$50 (from the 10% bonus). So it’s a question of whether the government wants actual money in the pocket now, or don’t mind having $50 on paper that they count as an asset anyway.

        • Bright Red 2.2.1.1
          5 May 2010 at 2:14 pm

          Of course, your scheme isn’t National’s scheme.

          National’s scheme is an extra $50 a year on the bill for graduates who aren’t on high incomes (perhaps are working in the volunteer sector or raising kids) while the rich get 10% off their voluntary repayments.

          • Lanthanide 2.2.1.1.1
            5 May 2010 at 2:34 pm

            Yes, I’m aware of what National’s scheme is. I’ll also point out that Marty’s post is a wholesale rejection of the idea, not a post saying “well it has some merit, if we tinkered with it a bit”.

            Also I wouldn’t classify being able to pay $500 a year as being “rich”. Especially because you’ll have to pay that money back eventually anyway.

            The actual rich people that you are attempting to invoke the image of won’t have student loans at all.

  3. bahandhumbug 3
    5 May 2010 at 2:16 pm

    We should make everything free and increase taxes to 100% to pay for it then we’ll be saved !….. blah blah same old ideological trash from the red team and the blue team arguing over the margins fuckwits the lot of them.

  4. AlbatrossNZ 4
    5 May 2010 at 2:48 pm

    Definitley agree with this post. The advantages are far outweighed by the disadvantages. If this economy’s going to do better and our government’s finances then education needs to be encouraged. Instead the government thinks a tack-on fee is what we need.

    • Lanthanide 4.1
      5 May 2010 at 3:16 pm

      I sincerely doubt a single person would say “oh, I better not go to uni and get an education because they’re going to charge me an extra $50 every year now”.

  5. Pete 5
    5 May 2010 at 3:51 pm

    Although I don’t disagree with the argument that an admin cost on Student Loans after graduation is necessarily a good idea (if it is verified and quantified), I do think that the discussion from the TE Minister to defend its introduction was very telling (http://www.stuff.co.nz/national/politics/3657644/50-student-debt-fee-plan-for-500-000):

    “Figures to be released today show that the total amount borrowed has increased by 20 per cent in the first three months of this year compared with the same period last year.

    The increase came from a rise in the number of students taking out loans (up 13 per cent) and the amount each borrowed (up 6 per cent for fees and 5 per cent for living costs).

    Tertiary Education Minister Steven Joyce said last night that the growth could not go on without policy changes.”

    Interestingly phrased when there’s no focus on delivering jobs INSTEAD of allowing pressure to mount on further education as an alternative, and when the cost of living is rising in real terms as wages rise below the rate of inflation – hence the increased pressure on living costs.

  6. ianmac 6
    5 May 2010 at 4:12 pm

    Isn’t something like the $10billion(?) Student Debt counted as a positive in GDP? Like the greater the cost for more in prison increases the GNP? Don’t really know but somewhere a long time ago I think I read of this paradox.

    • Bright Red 6.1
      5 May 2010 at 4:47 pm

      Spending on prisons is part of GDP. Student debt isn’t. But the education services that are produced through being paid for by student loans are.

      captcha: roughly

  7. graham 7
    5 May 2010 at 6:11 pm

    If you believe in the planed economy as the left do.As this nation cant afford to create jobs from thin air the next logical step is to restrict the numbers going to uni as it is a waste to train people and saddle them with student loans if there are no jobs at the end for them

    • Ari 7.1
      5 May 2010 at 9:31 pm

      Nobody in the left is proposing a planned, command economy. That’s just stupid, and it would be like me accusing Winston Peters of eugenics because he’s a racist who doesn’t like immigrants. Less strawpeople, please.

      And if you read half the posts here, you’d know pretty well that we’re concerned with finding more jobs for everyone. It seems to be National’s policy that not everyone deserves an education, however.

  8. infused 8
    5 May 2010 at 9:58 pm

    Funny thing is, all the student loan scheme is doing is training people for work overseas. Anyone with half a brain cell doesn’t stay in NZ. There are no decent paying jobs (Anything over 45k I class as decent).

    So I think this whole argument is null. Job creation first. Matching aussie with tax advantages.

    I’m off to aussie next month to look at finally expanding and opening a branch there. I really don’t see a future in NZ for my business to grow. Both govt’s have failed. I can’t get any iinvestment for opening another branch in say, Auckland or Christchurch, but I can for Sydney. Funny that eh?

    • Lanthanide 8.1
      5 May 2010 at 11:47 pm

      Funny, I got a degree here, have paid off $12,500 of my student loan through minimum payments only and make over $45k a year and I do have several halves of brain cells.

  9. Cactus Kate 9
    5 May 2010 at 11:59 pm

    If $50 that you don’t have to repay until you graduate and get a job, separates you from having a tertiary education or not then I can’t say you are that serious to begin with.

Links to post