Why Labour’s student debt policy is a success

Written By: - Date published: 1:56 pm, May 15th, 2019 - 85 comments
Categories: education, employment, grant robertson, jacinda ardern, labour, making shit up, Media, national, tertiary education, uncategorized - Tags:

For some time the right have been making this loud noise about Labour’s student loan policy and how it has failed because the number of students have not increased dramatically.

The manufactured narrative has persuaded some in the media.  They have bought into the premise.  But it is frustrating because the policy was all about generational equity and nothing about boosting student numbers.

If you need proof here is the relevant section from Labour’s policy platform.

Notice the phrase “will leave study with less debt”?

The comparison is fatuous.  It is like saying that climate change policy has failed because crime statistics have increased.

And the reduction in borrowing will long term have a significant beneficial effect.  It will not clear debt but it will mean that current students will be able to remove the millstone of debt from their neck sooner.

The reporting on the announcement that the Government will be able to make $200 million in savings on the scheme is also mischievous at best.  The savings are because the amount needed is less than anticipated.  A healthy economy and soaring employment reduces the desire of people to engage in full time education.

And this is also the message from Victoria University Students Association president Tamatha Paul.  From Radio New Zealand:

Ms Paul told Morning Report the scheme was proving beneficial to students.

“We know that this policy is being extremely helpful,” she said.

“We’re having conversations with students consistently, who are saying they wouldn’t have come to the university if it wasn’t for this policy, especially students coming from disadvantaged backgrounds and especially those getting scholarships who are now dedicated that money towards accommodation and living costs, instead of tertiary fees.”

“So I think they should keep their commitments and keep the funding where it is, were promises were made… Tertiary education, whether it’s higher training, university or polytechnic, should be affordable for everybody.”

However, Ms Paul said she was already disappointed the government was redirecting $200 million from the $1.9 billion allocated to scheme over four years, towards reforming vocational training.

“I don’t think it’s a good idea to assess the policy after one year… why are we assessing it and making such massive cuts. We do need to wait and see how it pans out,” she said.

I do not think she has grounds for being disappointed.  If the money is not spent then it should be used elsewhere.  But the roll out of the policy should continue. So that the incidence of crippling debt on our young people is reduced.

85 comments on “Why Labour’s student debt policy is a success”

  1. Stuart Munro. 1

    What it actually shows is that the policy was affordable, contrary to the high-pitched whining of Gnats. And, being affordable, one has to ask why a group as self-congratulatory about its economic skills as the previous government could not afford it.

    • Students looking for an education are likely to wait until its free for longer, hence Labour need to roll it out to three years, not just the first. Naff Nats don't have a clue we need well balanced educated workers with a aging pop, they did nothing and now are laughing out their two faces when Labour isn't as successful as it meant to be as if it was their batty success.

  2. Ad 2

    At 4% unemployment and fewer school leavers, demand for tertiary education can be expected lower.

     

    More interesting to see what they will reallocate the savings to at budget.

    • SPC 2.1

      1. Sure employers are more likely to grab some straight from school and train on the job if there are not enough grads about.

      2. Its already been tagged for other educational use. The industry training providers/apprenticeships area. 

    • Dukeofurl 2.2

      Its already been said  the money will  be 'directed' towards the  polytech/vocational training area.

  3. "And while 50 per cent of students from the high decile schools go on to university, only 17 per cent from the low deciles make it in."

    I'm all for intergenerational equality..but maybe we need to work on 'equality' generally. Though I'm interested to see you use that phrase, it certainly explains Labour Policies with Kiwibuild and fees free clearly being all about intergenerational equality for the middle classes.

    https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12179117

    https://www.rnz.co.nz/news/national/377757/fee-free-policy-having-little-impact-on-school-leavers-decisions

    • Kat 3.1

      I would argue it was the very push to get a university "education" post WWll that saw a gradual then rapid decline in apprenticeships and the take up of "lower class" trades. A degree was always promoted as a "step up the ladder to success". Sadly that thinking is still prominent today, and there lies the irony of your " inter-generational equality".

       At least the Labour led coalition is attempting to do something positive, I wouldn’t knock it just yet.

      • Pat 3.1.1

        the promotion of a university education as the only path to 'success' has been detrimental but the decline in apprenticeships (and their quality) is unrelated IMO….the apprenticeship path was completely undermined by the formation of ITOs

        • Kat 3.1.1.1

          My comment was the use of class terminology, trade apprenticeships were always "lower class". The "middle class" in NZ as a label is who we are, Jack being as good as his master.

          • Pat 3.1.1.1.1

            class terminology or otherwise, the point remains

            • Kat 3.1.1.1.1.1

              Except the decline being "unrelated" is the irony.

              • Pat

                and i would disagree around the timeframe of decline…as stated the decline is directly related to the formation of ITOs….the fact that some (and Id suggest a small minority) looked down their noses at 'the trades' is largely irrelevant…the decline began in the 1990s not post WW2

                • Kat

                  Read my comment above again about the push, the gradual, then the rapid decline since WW2.

                  • Pat

                    i have and my comment holds

                  • Pat

                    i am commenting on your comment @ 3.1 as the notation 3.1.1 indicates

                  • Pat

                    your comment caused me some reflection….if the decline of which you speak is the Labour Party rather than the desirablity of the trades then I agree with your timeframe..it is indeed ironic that the offspring of the blue collar workers that formed the Labour Party are now overwhelmingly graduates with no intimate understanding of those they claim to represent, and also why that support has waned….perhaps it is not so difficult to understand why so much policy appears directed at the middle class

        • Molly 3.1.1.2

          " the apprenticeship path was completely undermined by the formation of ITOs ".

          I agree, Pat, and this was compounded by the lack of oversight when they moved the theory and oversight out of the hands of institutions, and to private individuals.  The quality of the training was largely influenced by the quality of the teacher, and many received limited scope in their training.  In particularly, in construction where the apprenticeship schemes coincided with a dismantling of foundation to roofing builds, and many apprenticeships work on one aspect of the build and don't see projects through to the finish.

           

          • Pat 3.1.1.2.1

            indeed… sadly due to the lost capability, after 30 years it will likely take as long to remedy, if we can at all.

    • Pat 3.2

      "…and fees free clearly being all about intergenerational equality for the middle classes."

      pretty much….and a little paternalism to round it off

    • Observer Tokoroa 3.3

      Hi Siobhan

      Leaving aside the extensive wealthy sector of the NZ Population, should we expect Students to pay exorbitant Fees to the Universities. 

      Are Universities really needed, in the age of Digital Communication and Information ?

      Or is the continued impoverishment of hundreds of thousands of poor people satisfactory and pleasing to the Education Industry? Training Courses of any Kind  should not be passed on to the Poor.

       

       

       

  4. Gosman 4

    Why is removing debt for middle to upper middle class people beneficial to New Zealand as a whole?

    • mickysavage 4.1

      Because at the time they are poor people. They should be allowed to thrive and then pay more tax.

      • Enough is Enough 4.1.1

        Pay more tax than what?

        • mickysavage 4.1.1.1

          Than they would if they were not successful lawyers or doctors or whatever.

          • Bewildered 4.1.1.1.1

            kiwi build, 1b trees, thousands of jobs from provincial growth fund, 1800 new police in 2 years, reduction in child poverty, Free student fees to the wealthy, Subsidised electricity to the wealthy Entering Pike River mine beyond a few 100m (even that has yet still to be achieved) All policy fails, not even a must do better. Mickey however an A+ for cheer leading and dancing on the head of a pin

            • mickysavage 4.1.1.1.1.1

              You expect dramatic turnarounds so quickly and do not tolerate delays.  Why is that?

              • Rob

                We are expecting these dramatic turnarounds as you put it Mickey, because that is what we were promised.

                For all of us in the building industry , we were told that we were doing it wrong and that they would fix it, what ever that is.  

              • Enough is Enough

                Labour told us that they would turn it around.

                Kiwibuild is playing out exactly as it opponents predicted it would.  

          • James 4.1.1.1.2

            or if they get a BA – front line McDonald’s workers. 

          • Sabine 4.1.1.1.3

            the country needs plumbers, builders, bakers, cabinet makers, nurses, teachers, sparkies, people that can build stuff that does not leak, does not mold, does not kill, does not poison the world …..but lawyers is the one thing the world does not need. We have to many of the empty suits already. 

             

             

        • Pat 4.1.1.2

          pay more tax than whom

           

      • Gosman 4.1.2

        But Labour is not raising taxes on the top earners to compensate.

    • SPC 4.2

      Reducing educational debt to reduce inter-generational inequality. 

      Having tertiary debt makes it harder to do the now difficult, save to buy a home. 

      • Muttonbird 4.2.1

        Yes. A CGT was to reduce intergenerational inequality also but a bridge too far right now apparently.

        Your comment will have fallen on deaf ears unfortunately because the people gosman represents merely view intergenerational inequality as their competitive advantage over lower income families – something which the state should not busy itself in addressing.

      • Gosman 4.2.2

        The issue with housing is a lack of supply. Increasing the amount first home buyers will be able to afford will just feed in to increased house prices.

        • SPC 4.2.2.1

          Even if there were the supply, there would is a problem with people getting the deposit together to buy if they are delayed by having tertiary debt  (there is the family time window involved). 

          That supply has to be dealt with is no reason for ignoring this issue.

      • Tuppence Shrewsbury 4.2.3

        rather ridiculous argument. You invest in your degree to seen a higher wage to be able to afford a house sooner. 

        Not all debt is bad.

        • SPC 4.2.3.1

          Having trouble comprehending the difference between doing a tertiary degree and having no debt and not doing a tertiary degree at all? 

    • Dukeofurl 4.3

      "Why is  removing debt for middle to upper middle class people "

      because its not only for them-  it covers level 3 courses which include almost all apprentices, and plenty of  others such as hairdressers, office & computer   courses, forestry and agriculture , horticulture. and so on.

      What you are showing Gosman is  your  own middle to upper middle class biases and assume that everyone studying is 'just like you'

      • Gosman 4.3.1

        You think the uptake on this is going to be shared proportionately across income groups do you?

  5. bwaghorn 5

    Id be interested to know if any poo people got to start futher education because of this policy.  If they did that makes it a success imho

    • Enough is Enough 5.1

      Poor people could always start further education. The loan system wasn't restricted to the middle class.

      When I went through university between 1998 and 2002, we were all broke. Some had rich parents who paid their fees but the majority of us had to borrow to pay course and living fees. I wasn’t prevented from accessing further education because I could not afford it – nobody was.

      I left university with a $40,000 loan that was repaid by the time I turned 35.

      Some people will call that a burden. I called it an investment in my future.

      • Pat 5.1.1

        student debt paid off at 35 (and still paying tax)…..35 seems rather late in life to have paid for your education (not a criticism of the person)….especially if society values your skills

      • greywarshark 5.1.2

        An investment in your future – if the PTB don't instigate a great shaking up and sacking regime.    It is okay if you can pay it off, but house prices have gone higher, rent is higher, and the trend forecast for salaries is down or precarious 24 hour call up at times.

        You have done it, my son and daughter in law have done it – got jobs and repaid the debt.   But that is not strong indication that it is a valid system for the mass of people.   It needs to be suitable for 90% of people don't you think and do we know how many are having difficulties trying to repay and make a life and find secure work will regular pay rises to allow a reasonable lifestyle.

    • Cinny 5.2

      Am guessing you left an r off of poor llololz 🙂

      Anyways I know someone who is poor/low income and a solo parent.  They are working part-time and studying fee's free for an early childhood qualification.

      The only reason that person is studying is due to fee's free.

      Said student is getting really good marks, am super happy and proud of them.

      • Enough is Enough 5.2.1

        Said student only gets one year free and can borrrow the balance – as they always have…

        They will continue to get good marks and I am also happy for them

  6. Exkiwiforces 6

    Does this awesome plan apply for those doing farm/ horticulture Cadetships and those doing apprenticeships when the “No Mates Party’s” back in the 90’s said if you want to continue your training for your specific occupation, you needed to take out a student loan in line with university counterparts in order to finish or start your training?

    In my case I told them back then, you can stick your student loan scheme up your Jackise as the pay rate for my chosen field was just above the minimum wage and I didn’t have a hope in hell of paying it off until my mid to late 30’s back then I had stayed in NZ to complete my studies/ training. The pay rates in NZ Army was even worse and in some case below the minimum, hence why I popped smoke  and bugged off overseas. 

    Thanks “No Mates Party” for sending/ driving me overseas and it’s great to see the Labour CoL giving 1st years a leg up, unlike the “No Mates Party” who rather get overseas tradies and farm workers in to drive down wages and even worst didn’t or want to invest in young  NZer’s who a trade or do a farm/ horticulture Cadetship.

    • In Vino 6.1

      +1 Exkiwiforces

      I have been so irritated by New Zealand's recent failure to recognise that Education is a Public Good as much as a private one.

      Rogernomes taught that it was purely a private one, and we foolishly introduced 'User Pays'.

      We need to grow up and face the fact that Education is a Public Good.  Look at Germany – one of the most successful economies in the world.

       

      • greywarshark 6.1.1

        The National Party and RW in general are bottom-feeders who think they are smart for forcing wages down for the general working person.  

        I believe that the Treasury, if it wants to be a good manager of the economy, should have similarly looked for cost-efficiency in salaries at the top level and introduced tendering for a position.   That would both cut 'human resource' expenditure, and probably the fee paid to agencies which is probably tied in some way to the level of salary in the person found for the position.   And the managers and CEO would get a small performance bonus at Christmas on the same percentage as the workers.   That would mean they would get considerably more, but there would be limits to their expectations then.

    • A 6.2

      Yea +Exkiwi

      The more education costs, the greater the risk to the student…sorry "investor".  Nothing beats real world learning in terms of investment returns.  It's more satisfying and you are likely to pick up skills that leave academics in the dust. 

  7. Whirlsler 7

    Let's say it was government policy to pain every house in the country bright red. Let's say that one reason for doing this is that red houses are happier houses. Let us also say that they go out there and succeed with this policy.

    The Opposition complain that happiness statistics haven't improved at all and say that the policy is therefore bad. The government and its supporters insist that the only justification for the policy is that they wanted houses to be red. They did that. Therefore the policy is a good one.

    In this example, the Opposition's position is much more sustainable. As with Labour and student fees (as presented in this article) the government's position is "true, but trivial". It (and Labour) deserve no respect as a result of their "success".

    I have an enormous student loan. It is as big as the example ones, if not larger. But I am a massive outlier in this respect. On the whole, NZ's student loans are (a) pretty small and (b) interest free. Fees are not a barrier to students. Fixating on the size of the debts of students is entirely misleading because what we actually care about isn't the size of the debts. Or, at least, it shouldn't be. Successfully reducing debts or painting houses red doesn't validate the existence of the policy.

    Labour were very happy to piggy back off the (vastly stronger) "access" rationale. Sure, it exposes them to the critique that living costs (not fees) are the problem. Indeed, the absence of the postgrad student allowance (also promised by this government) is one of the reasons my loan is increasing (and I live very frugally). To turn around and act like this has nothing to do with their policy is completely specious. Especially when it's a nonsense to talk about "affordable" without "access"… 

    Even worse, the whole debt thing piggy backs off an American discourse where the base loans are vastly bigger and interest is charged on them…

    In terms of the access rationale. Firstly, they should have, immediately, restored the postgrad allowance. Secondly, they should have, immediately, brought in the improvements to the undergrad scheme they did bring in. Thirdly, they should have worked to massively expand the allowance scheme (particularly at undergrad/non-university tertiary providers) as soon as they could. Fourthly, they should have looked at facilitating improved transport concessions (these being part of the access issue). And finally they should have investigated what else they could do, e.g. means testing fees free. Universal fees free policies are a nice to have, once you’re sure the real access issues have been addressed. But helping low income families can never win as many votes as helping the middle class.

    • SPC 7.1

      Sure they should have brought back the post graduate student allowances straight away. 

      But it would be inappropriate to charge some and not others for education costs. Its universal one way, or the other. 

      • greywarshark 7.1.1

        Tunnelling through Whirsler's prolix, this at the end offered some thoughts that seemed reasonable.

        In terms of the access rationale.

        Firstly, they should have, immediately, restored the postgrad allowance.

        Secondly, they should have, immediately, brought in the improvements to the undergrad scheme they did bring in.

        Thirdly, they should have worked to massively expand the allowance scheme (particularly at undergrad/non-university tertiary providers) as soon as they could.

        Fourthly, they should have looked at facilitating improved transport concessions (these being part of the access issue). And finally they should have investigated what else they could do, e.g. means testing fees free. Universal fees free policies are a nice to have, once you’re sure the real access issues have been addressed. But helping low income families can never win as many votes as helping the middle class.

        Offering free fee for the first year and waving the carrot of extending that to three years was good to boost the idea of getting more education  quickly.   So what about that – are they going to extend the free period for these first up students.    Perhaps after this they should do the means test bit – I say that, knowing a child from a 'poor' family who never got the full allowance that a mate did whose parents were reasonably well off.

        And the post grad students need looking after.   I fear that cutting away help to them, was because the emphasis has been on bringing in foreign students to help pay for our education budget for NZs.

  8. infused 8

    Micky, you're the gift that keeps giving on here.

    This was a bad policy. It was middle income+ welfare, which is not needed.

    • SPC 8.1

      Three strikes. 

      It's world leading good policy – Germany and Ireland already do it. It's not income. It's not welfare. 

  9. SPC 9

    It will be interesting to see if National inform 18 year olds in 2020 – that they will not have two years free tertiary education (2020-2023) if they win the election.

    I'll call it now, they won't.   

    • Chris T 9.1

      It will be interesting to see if Labour still extend it

    • Enough is Enough 9.2

      18 year olds aren't really the demographic that National is chasing, or attracts. I am pretty sure this will be a policy that they will campaign against.

      • SPC 9.2.1

        Their global warming policy, their CGT animous and their do little on affordable housing does indicate a general disregard for those of the next generation.

        However they do have a habit of campaigning agasinst a policy, then adopting it. Such as interest free loans and WFF tax credits. 

        Will it be no fees tertiary edcuation and the income supplement to pay power bills this time? 

        • Enough is Enough 9.2.1.1

          Not if they need that money for tax cuts.

          My prediction is they will redirect Winston's 1B per annum fund and the free tertiary funds directly to tax cuts.

  10. SPC 10

    When is Labour going to enact the second and third parts of their 4 point policy? 

  11. Panda 11

    In light of the latest news regards uni students buying essays etc I would think uni qualifications have just been pushed into the irrelevant bucket. I would assume its not just International students.

    • Formerly Ross 11.1

      On the contrary it takes initiative to cheat successfully, just what employers are crying out for.

      • Panda 11.1.1

        Funnily enough you may be right. Although financial means would need to be up there.

         

      • Janet 11.1.2

        Initiative on the part of the first one or two that did – the rest were sheep following the Leader along the path.

  12. Chris T 12

    "The manufactured narrative has persuaded some in the media.  They have bought into the premise.  But it is frustrating because the policy was all about generational equity and nothing about boosting student numbers."

    If it wasn't about increasing numbers why did they go on about increasing numbers and budget for an extra 3% of students?

    Hipkins

    "

    While announcing the policy details on Tuesday, Mr Hipkins revealed the Government had budgeted up to $380 million for the current financial year to cover the fees-free policy, and the increase to student loans and allowances.

    He expected 50,000 of those eligible under the fees-free scheme to pursue industry training, with the other 30,000 attending university.

    "Employers have also been calling for bold forward thinking to build a future workforce with new skills to meet changing demands," says Mr Hipkins. "That's what this policy will deliver.

    "We expect the policy to halt and, over time, reverse the current trend of fewer people going into post-school training and education.

    "We have budgeted for a 3 percent increase in equivalent full-time students in 2018, equating to about 2000 extra students.""

    We will see if it is a failure by them carrying on extending it to 3 years……Which Labour seem to avoid saying they will still do.

    If it the extra 2 year promise they made is dumped we have the answer

  13. Jimmy 13

    Whats his next article? "Why KiwiBuild is a success?"

    • Stuart Munro. 13.1

      Why wouldn't it be?

      Housing is not a problem that goes away if you don't fix it. Whatever the initial setbacks, a building program is required and it will be pursued until it delivers results.

      This is not a feckless Gnat government, to shy at the first hurdle.

      • Shadrach 13.1.1

        "Why wouldn't it be?"

        Indeed, particularly given Mickey's current penchant for irony.

        • Stuart Munro. 13.1.1.1

          It's more to do with Gnat stickability.

          Key talked a great game on housing in 2008, but gimped out in power.

          However hard it is to progress housing in the wasteland created by neo-liberal dysfunction and compounded by Gnat corruption and incompetence, it must be done.

          And a government, as opposed to a pack of rabid reptilians, is obliged to persevere through the difficult stages until they achieve results. The Nick Smith or 'Claytons option' is not an option for government.

          • Shadrach 13.1.1.1.1

            "However hard it is to progress housing in the wasteland created by neo-liberal dysfunction "

            And yet Labour has gone with the begging bowl to private enterprise to deliver the houses they promised to build! Funny that.

            Labour had 9 years in opposition to formulate a workable solution.  They failed, and are failing.  That is why Mickey's post can only be a work of irony.  There is no other logical explanation.

            • Stuart Munro. 13.1.1.1.1.1

              Tain't over yet buttercup.

              • Shadrach

                Kiwibuild is well and truly 'over'.  A 'rebranding' awaits, following the 'recalibration'.  Just as well our PM knows all these buzzwords to use to excuse her governments failure.

  14. SpaceMonkey 14

    Seems to me that vocational training (awful term) is needed in NZ at the moment (and foreseeable future) more than University commerce and legal graduates.  

  15. A 15

    If your goal was to reduce the amount of student loans it would make more sense to wipe one years worth of fees after the successful completion of tertiary study.

    What makes up 49.8% of the US government assets?   Student loans. 

    https://goldsilver.com/blog/half-of-total-us-government-assets-arestudent-loan-receivables/

    This stupid get-into-debt to become employable scheme started in the US in the 1980’s. They still chase debt from the 1980s and 90s even though the students clearly didn’t realise enough income to justify their “investment” because it cannot be discharged in bankruptcy.

    • SPC 15.1

      One option is to extend the scheme to writing off existing tertiary debt – something we should certainly do for teachers and nurses. First not require repayment and write-off the principal 10% per annum. 

      • Janet 15.1.1

        Could we also make that apply to people who paid fees for courses. that failed to finally get NZQA  qualifications, which meant they could not go onto teacher training as stipulated in the prospectus of the day.

    • Shadrach 15.2

      "What makes up 49.8% of the US government assets?   Student loans. "

      Just to clarify, the article you refer to talks about Financial Assets only, not total US Government Assets.  The distinction is important, particularly as you use the dta to justify the claims in your final paragraph. 

      Total student debt in the US is around US$1.56t (https://studentloanhero.com/student-loan-debt-statistics/), and the US has assets of around US$270t.

      While I agree with the sentiments of your first paragraph, student loans are a good way of holding students accountable for choosing an educational pathway that will ultimately be self funding via employment.

  16. mosa 16

    " The manufactured narrative has persuaded some in the media "

    The media don't need persuading they are inherently bias of anything that is not National policy.

    • Panda 16.1

      Agreed mainly. Although I wondered if it was due to the fact it was easy to get reports from blogger Cam in the day and made for lazy journalism habits and now its a case of actively having to look. Not one word on the rebuilding up of stock from State housing being just one I would like to hear about. A quick look at comment sections on news shows a very misinformed amount of people if you can wade through overseas accounts and multi ID trolls. Even when a story appears accurate the comprehension gets lost. Too many Uni grads with money?

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