Herald on Student Allowances

The Herald editorial is very good on student allowances:

Yet the Prime Minister has now confirmed a Labour government would spend $420 million to phase in a universal student allowance over the next four years. This is ill-conceived, unnecessary and unaffordable. In sum, it is an exercise in irresponsibility by a party that has been all too keen to preach fiscal prudence.

It is massively irresponsible. I am actually a supporter of ending parental means testing, but why in God’s name did Clark not end it when there were $10 billion surpluses. Doing so then would have been universally applauded. But doing it when you are forecasting a decade of deficits is madness.

In many ways, the progressive lifting of the parental income threshold – the lead-in to a universal allowance in 2012 – actually represents a more sensible means of helping students than the lifting of interest on loans.

It is much more sensible. Interest free loans is a bad policy. It gives out bad incentives to borrow. Removing parental means testing is more sensible as few can argue a 24 year old is reliant on their parents.

One of the Vice-Chancellors was quoted as saying NZ spends around three times as much in direct student assistance (as a percentage of total tertiary spending) than the OECD average. What this means is instead of investing in the tertiary instiutions (allowing them to keep fees down), they are giving cash hand outs to students with interest free loans etc.

The answer is the level of tuition fees charged for courses. A steep rise in these has occurred since an increasing number of school-leavers began to seek tertiary education, much of it for trade training. If more of the latter was reclaimed through apprenticeships and suchlike, the cost to the public of tertiary education would drop, and lower fees could be introduced.

Indeed.