Past grades could affect future government assistance to students

The other day I was advised by letter of changes to student loans and allowances. Grades are going to affect eligibility to loans and allowances. But I was particularly surprised to see that grades from 2009 will count towards eligibility. Doesn’t affect me, of course, I passed everything well.

Had I failed half my courses in 2009, I could get a student loan or allowance in 2010. But perhaps not in 2011. And according to Tertiary Education minister Steven Joyce, this new policy of passing more than half of your papers could affect 9000 students – at least the ones that can be enrolled.

If you are being slack and partying hard, and fail because of that, fair enough. But what happens when a student who studied in 2009 because he couldn’t get a job, mid year got a dream job and dropped out of studying. He passed his three semester one papers –getting straight As - but as he has not passed any of his five semester two papers, he will get no government assistance if he wants to continue his degree – even if he wants to study extramurally and do just two papers while working. What if he gets made redundant and wants to go back studying? Will he have to pay everything himself?

Also, a first year student who gets to grips with studying passes three out of eight papers in 2009 because he’s sick, has family and part time work commitments. Perhaps he took on more than he could chew and withdrew from one mid-year. Perhaps he is an extramural student who took a third year paper in his first year (as I did). While a pretty poor performance, it is a little different to a student who skylarks and doesn’t make the effort to pass his papers. But he is treated like one.

So, he takes fewer papers the following year. He doesn’t get a student allowance so he gets a job and takes four papers, passing three with A grades, and withdrawing late from one. Because he did not pass more than half his papers in his first year he may not be entitled to a student loan. His sin was not academic underachievement or slackness – probably more like overcommitment.

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Students are likely to have to fund their own Masters study?

Victoria University's Salient has popped up a story about eligibility to the student loans scheme for post graduate students.

Some future doctors and those seeking a higher education will be forced to fund some of their own studies after changes made to the Student Loan Scheme earlier this year.

In an exclusive statement to Salient, Tertiary Education Minister Steven Joyce admitted that the changes made to the Loan Scheme in Budget 2010 will mean that some students will not have access to student loans to cover their final years of study.

This is nothing new. There are limits on how long students can get a student loan and for the average student with a three year degree (and honours) this policy won't affect them. But the Salient article says the opposite.

The loan scheme restructure means students who complete a double degree and honours will likely need to fund any Masters study out of their own pocket, but may then be able to access funding for Doctorate study.

That is simply incorrect.

Most students will be unlikely to have to fund their own masters even if they did two degrees - anyway, most students would do a double major,which takes around the same time as a single major.

Most degrees take fewer than 5 EFTS (effective full time student) to complete. A student who studies full time for about 52 weeks a year is a 0.8 EFTS. An undergraduate can get the student loan for 7 EFTS, with a further 1 EFTS allowed for postgraduate study and 3 EFTS for doctoral study if these EFTS are unused.That's more than eight years of study. The same rules apply for the student allowance. So the average full time student studying to honours level will only run out of EFTS if he or she fails and then resits a good deal of papers - in a second degree.

Where the policy could affect students is post graduate study after degrees that take around seven years - such as medical studies. But it is blatantly incorrect to state that students who complete a double degree and honours will likely need to fund Masters out of their own pockets - with the implication that most students who have done honours will have to fork out for Masters.

You only have to look at the Cabinet papers to find that out. Obviously Salient didn't bother to do that.

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Government to change the student loans scheme

Currently any student who gets a student loan doesn't have to pay interest, nor do they have to pay it back unless they are earning more than $19,084 a year*. But the government wants to change the student loans scheme. The NZ union of students' associations called on the government to commit to providing interest -free student loans.

So it did.Tertiary Education Minister Steven Joyce said:

We're going to keep the student loan interest-free, but then we're going to look at other requirements around those student loans. The simple point is, if you don't pay interest on any loan – forget student loans for a second – then there is less incentive to pay it back than if you do pay interest.

So, what changes will be made? Here are some options:

One: Fewer people will be entitled to interest free student loans.Non achievers at school, for example. For those who fail first year papers, not only will you be unable to get a student allowance, you may not be allowed to resit the papers, even if you pay for the fees upfront.

Two: the earnings threshold where you have to pay student loans may be reduced.

Three: you may have to make repayments at a lower earnings threshold- which means more full time students will be making payments.

Currently you can make bulk repayments of at least $500 and get a 10% discount. This in effect means that if you pay off $1000 in one hit, you`ll shave off most of the amount for a year's student association membership for most universities.If you invest your student loan, you`ll make at least 10% on your investment. But if the earnings threshold is lowered, some students who earn the equivalent of a student allowance will have to make loan repayments. Perhaps the government will introduce repayments while studying. If so, some who get the student allowance will have to repay money back while studying - and if they don't get a job immediately after studying, there will be no reason while beneficiaries will not be forced to pay off their student loans through benefit income.

It is clear that the government wants more people to pay more of their student loan at a faster rate. To lower the existing rate of student loan debt, it must be paid off faster than the dollar value of future applications. I would not be surprised if the government restricts future applications and mandates quicker loan repayments at the same time - putting the squeeze on students and graduates.

Whats the bet also that National, should it win the next election, then lifts the fee maxima?

*note: if you are overseas for six months or longer, you get to pay interest on your loans.

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