Allowances Expansion A Cost The Country Can’t Bear

27 May 2004

Student allowances expansion is a cost the country can’t bear

The Budget’s expansion of student allowances while benefiting students short-term will simply be money unavailable for more necessary social investment and other levels of education, says the Education Forum.

The government has announced a $110 million tertiary spending package, which includes making around 40,000 students eligible for increased allowances and widening the loan scheme.

Education Forum policy advisor Norman LaRocque said the funds needed to pay for student allowances had to come from somewhere and taxpayers could finance several students through loans for the cost of one on allowances.

“Sure, students make sacrifices to get a tertiary qualification, but all investments – whether in a new business, technology or even a herd of cattle – require some up-front commitment to realise future gains. And countless studies have highlighted the benefits, from higher lifetime earnings, that accrue to tertiary students,” Mr LaRocque said.

While increased allowances might stop student debt from increasing, it would do so only by increasing the burden on taxpayers, who already carried the bulk of tertiary education costs.

New Zealand’s student allowance policy is already generous and the loan scheme is, and has always been, one of the world’s most generous. The government was simply trying to buy votes from students, Mr LaRocque said.

ENDS

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