NZ Herald on student loans

The Herald editorial yesterday:

More than 40 per cent of the money that the Government puts into tertiary education goes directly to students as allowances, loans and interest subsidies. The average for such spending in OECD countries is close to 18 per cent. 

Steven Joyce said we have the most generous student support scheme in the world, except maybe Scandinavia.  We also have the most generous pension scheme in the world, as it has no income testing and no asset testing and is linked to the average wage.

The Prime Minister says the changes will be “modest”. That is as it must be. A sluggish economy would be done no favours if the repayment of loans became so onerous that graduates could not afford to take out mortgages and suchlike. Or if students denied allowances responded by taking on a great deal more debt. Modest adjustments ensure students and graduates will not be subjected to serious hardship. It says much for the scale of the spending, however, that such relatively small steps will save the Government tens of millions of dollars.

John Key says this saving will be reinvested in the research and teaching capabilities of universities to help raise their world rankings. That represents a change of tack. Previously, the Government had talked of transferring this money to universities to fund tuition for more students.

Not before time, it has recognised that something must be done about the sliding international ratings of the country’s universities, and that the throwing open of entry to them has been an important factor in this.

Also pleased to see Steven Joyce plans changes to the PBRF.