Four Years Student Loans – Another Nail in the Coffin for Science in NZ?

By Michael Edmonds 05/05/2012

The recent decision by the National government to provide only four years of student loans has provided an outcry from the student community. The example presented most commonly in the media is what this means for medical students who will have to fund the final year of their degree themselves. However, what does this decision mean for science?

Fours years of funding will cover a three year undergraduate degree and a one year honours degree or half of a two year masters degree.* Alternatively it will cover the four year degrees common in some areas (e.g. engineering)*. The PhD remains outside this funding. At the moment many students make ends meet on a PhD through scholarships or teaching fellowships, however, how will these current funding models deal with the additional cost to students of no longer receiving a student allowance?

*Of course this does not take into account students who for one reason or another need to do a foundation year at a tertiary institution before pursuing a degree programme.

While this government continues to indulge in occasional rhetoric about how important science is, their actions speak louder than their words, for example, the recent merger of the Ministry of Science and Innovation into the Ministry of Business, innovation and Employment, means we no longer have a Ministry which appears, at least outwardly, to represent science. (As a comparison, a senior Australian Minister is their Minister for Tertiary Education, Skills, Science and Research while in the UK they have a Minister for Universities and Science).

The Tertiary Education Commission has recently provided a guide  for Tertiary Education Organisations which specifically states that they want more students to be engaged towards more Science, Technology, Engineering and Mathematics (STEM) studies however, it is unclear what, if any resources, will be provided for any change in the number of students studying science related subjects.

Government ministers in New Zealand are happy to talk about how important science is, but their actions do not match their words; the same sort of disconnect one sees in an abusive spouse who will say “I love you” while squeezing their hands around your throat.

0 Responses to “Four Years Student Loans – Another Nail in the Coffin for Science in NZ?”

  • The change is to limit student allowances to four years (and under half of students get them anyway). Students will still be able to take out a zero interest loan. Also Steven Joyce announced on Thursday that STEM enrolments would be funded at a higher rate (details in budget). Science is likely to be one of the few areas of tertiary education to benefit in the Budget.

  • The impression I got from the media is that the student allowance will be limited to four years but that student loans have the same duration as before (7 EFTs). The loans will have to be paid back at 12% instead of the current 10%.

    I’m supporting two students through university, neither of whom get the student allowance because of my income, so my immediate take was of no change for me. I still have to provide for their accommodation, food and living expenses for the next three years (not that I regret it).

    As a family we look to the student loan for university fees only.

  • In which case, Dave, won’t they be further increasing the size of the loan they subsequently have to pay back?

    On the STEM funding – this will help institutions cover the higher costs of actually teaching science, it’s not money that will likely find its way to the students themselves. We’ll be expected to take more science & engineering students with no change in overall student numbers.

    At a time when we are told NZ needs more scientists & engineers, this move seems more of a disincentive for students to consider taking out the graduate degrees they need to pursue those careers.

  • Like you, Stuart, we supported/are supporting both our children through university; we expected to (again, due to income) & no issues with that. But many families can’t afford that option. Add to that the fact that quite a few students need a ‘foundation’ year or a longer pathway through their degree (eg want to do engineering but didn’t quite get the level of maths or physics needed, or had poor advice on the mix of subjects to take in year 13, or their school didn’t offer some of those subjects at that level – it happens) & the pressure will really start to come on.

  • Student allowances ≠ student loans

    In fact, to the extent you are able to receive a student allowance, you are unable to borrow for living costs as part of the student loan.

    This is not going to prevent people from studying beyond four years, it will mean people will need to borrow using their student loans (or work) to pay their living expenses beyond four years.

    What this may prevent is people doing 5+ years of study in degrees with limited job prospects (I can hope). I don’t think STEM subjects are one of those degrees.

    As long as the vast majority of the savings go into STEM then I’m ok with this change.

  • Alison makes a good point, postgraduate students will now need to go into greater debt to achieve their Masters of PhD degrees.
    I do wonder how this will affect students decisions on which career pathway to follow. Will, for example, a 5 year medical degree look more rewarding than a 7 year PhD? Will a 4 year engineering degree look more rewarding than a 5 year medical degree.
    I’d be interested if Alison and Stuart have any comment on how their children made their decisions on what pathway to take. Was there any consideration for the cost?
    Stephen Joyce has made comments about how postgraduates will earn more than those who do not, but I don’t think this matches reality. If you factor in the loss of earning during the 3(or more) years of a PhD, plus postdoc years (during which one often just breaks even) the earning potential isn’t as strong in science as Joyce makes out. It certainly isn’t the same as, for example medicine, or engineering.
    With regards to politicians promising more funding, I’ll believe it when I see it. The follow through by politicians in this country when it comes to science funding is less than impressive.

  • Alison’s comments also reinforce that now, more than ever, good career advice at schools is vital. Students can afford to lose any of their tertiary allowance (4 years) or their loans allowance (7 EFTS).

    I wonder long term how this will affect foundation programmes at tertiary institutions?

  • Correction, just checked the studylink website and for postgraduate study (and some other conditions) the 7 EFTS can be extended to 10 EFTS for student loans.
    Of course while this still means even more debt for the student if it has to be used.

    “to the extent you are able to receive a student allowance, you are unable to borrow for living costs as part of the student loan.”
    This reinforces the point that without student allowances students will accumulate even more debt doing postgraduate study.

    Shaun, you also said “As long as the vast majority of the savings go into STEM then I’m ok with this change.”
    I hope that the changes will be transparent enough so that we can see indeed if this is the case.

    Of course, if we do end up with more graduates in STEM, the next question is, where will they be employed?

  • Michael, you make a good point regarding good career advice at schools. It is vital.

    As for your point about this increasing student debt, this is only going to impact on those who previously received a student allowance. I’d suggest that those who receive a student allowance for three years generally have less debt than those who don’t have access to it, and that three years is probably enough “free” support.

    The question becomes, what are the impacts of this change, and are the impacts fair?

    Is it fair that someone who spends five years at university needs to pay back the living costs for one of those years? It will paid back interest free… and it won’t impact them until they’ve paid first paid off the rest of their loan (as prior to that they were paying off their loan anyway).

    If you factor in no interest I don’t think what is being asked is too much.

    Maybe I’m biased, I needed to borrow my living costs and just finished paying them back last week (the amount was significant). I’m feel no worse off.

  • >won’t they be further increasing the size of the loan they subsequently have to pay back? (Alison)

    I think that’s the point. The effect is probably going to be to discourage extra study unless the student can see that they will clearly earn a sufficiently larger salary to justify the extra student loans.

    And most comment seems to overlook the Minister’s promise that these cuts are going to pay for extra funding in science and engineering.

  • Well, it will depend on where the extra funding goes, I guess – there hasn’t yet been any suggestion that it will be directed at encouraging the students themselves. TEC has told the tertiary institutions to to increase enrolments next year in science, technology, engineering and maths and, if necessary, to cut other courses to do that (there’s a link from my own blog) & we’ve been told that increase has to be within the existing cap, which sounds like it can only be achieved by taking fewer students elsewhere, which is a different kettle of fish from funding students to study in the sciences for the time needed to train them up beyond the undergraduate level.

    And therein lies a bit of a problem. Hipkins & Bolstad ( found that (using Australian data, but they comment that the same trend appears to exist in NZ) Australia’s overall national pattern for this measure shows a steady decline in enrolments in all three traditional science disciplines (biology, chemistry, physics) from the late 1970s to 2002, the last year for which data were available, with chemistry being the least ‘popular’ of the three. To some extent that was compensated for by increases in subjects like general science, psychology, marine science etc. Curriculum share – the proportion of the school curriculum occupied by the main science disciplines – also declined.

    So the challenge for us is, how do we turn that around? Because without more students taking the sciences throughout their schooling,we’re going to have a real problem encouraging more to take these subjects up at university (& that’s without the ebb & flow of demographic bulges).

    Must write about the Hipkins & Bolstad work; it’s really rather interesting 🙂

  • Michael – both our kids chose to follow their interests (one into accounting; the other, environmental science), without appearing too concerned about relative costs & rewards.

  • Shaun,

    Congrats on paying off your living costs loans. That must be quite a relief.
    I guess everyone has different biases depending on their background and experience. I managed to get through university just before the loans were necessary and kept myself debt free by working every holiday. When I look at what students have to go through to day I do wonder if i would have made the same decisions.
    And when it comes to suggestions that the pay off for postgrad study is worth it, my brother who did not attend university but instead worked for a bank, not only had seven more years working than I will have but also currently earns at least 50% more than I currently do.
    Anything that could possibly dissuade students who enjoy science from studying it, cause me deep concern and I do worry that this sorts of changes could do that.
    With regards to the student loans and allowance schemes, I think there are built in inequities and if it were possible I would much rather see everyone able to get the allowance and have this balanced by higher taxes across the board, but particularly for those in the higher salary brackets.

    Alison, great to hear your kids were able to follow their interests. This is something I hope all students are able to do. I’ve spoken to various graduates from engineers to medical doctors who now regret their choice of career, often because they were pushed by their teachers or parents into occupations they thought would be financially rewarding.
    (On a personal note – one of my science teachers at school, when I told him I wanted to study science, told me it would be better if I pursued medicine, law or accounting. Sigh).

  • Likewise, my son gave no consideration to potential salary or cost of student loan – he just knew he wanted to do physics. He says that he didn’t go into a science degree with the notion of becoming wealthy as in his opinion, scientists don’t get paid as much as other professions. His 19 yo friend went into accounting, gained a cadetship and now earns $50 k in his second year whilst all study costs are paid.No worries about student loans. If only we could do this for our bright young science students.

  • Maree,
    Good to hear your son has followed his interest. Though it is a pity physicists don’t get paid as much as they should.

  • Michael,
    Our kids were encouraged to follow their interests. They knew we would support them whatever the cost.

    One wanted to do economics but then changed to medicine (btw six years, not five, although the sixth year has some income from the DHBs). The other is doing environmenal science.

    The first changed to medicine after the second was hospitalised with brain cancer, and doesn’t regret the change. The second discovered their forte after taking geography for the first time in year 13.

  • Thanks for sharing that Stuartg, I find it fascinating how school students make their career choices. I think it is an advantage for those who have parents with a wide understanding of different career choices and who support their children without pushing too hard their own agenda.

    I think all parents have an important role to play in their children’s careers. My parents were supportive of me attending university even though they weren’t familiar with tertiary study themselves, and they encouraged me to write to organisations such as the DSIR to find out what a science career was all about, and to seek other information about possible careers.
    The advice I got from school was lacklustre to say the least – a five minute conversation during which I got a pile of brochures for different institutions.

    I do worry for talented students who have parents who do not understand tertiary study or worse still have a “tall poppy” approach to education. For these students career advice at school is vital.

  • Michael,
    Both Mrsg and myself are the firstborn of our generation. None of our ancestors or extended family have previously attended university. Mrsg’s parents and grandparents were self made Kiwis. My parents were the first to leave the terraced houses of working class England.

    Neither of us were encouraged into any particular career, but both were encouraged to follow the sciences at high school and eventually go to university, no matter what it would cost our parents.

    We tried to do the same and both of our kids knew that they would go to university even when they were in primary school.

    A personal belief is that if a child knows that they have their parents’ support and expectation of a university education, they will get there as a matter of course no matter the obstacles in the way. Our second is a good example – in spite of effectively losing 2-3 years of education and social development in their middle teens, they are now indistinguishable from the rest of the undergraduates. 🙂

  • This is not going to prevent people from studying beyond four years, it will mean people will need to borrow using their student loans (or work) to pay their living expenses beyond four years.

    That may be true in some cases – specifically cities where the cost of living is low. Unfortunately in Wellington the cost of living is high enough that the student loan living allowance is insufficient to cover it. I currently borrow the maximum available for living costs as well as receiving an allowance from my dad and my bank balance is still declining – my main expenses being rent, transport, and groceries (I would reduce my transport costs by walking more if I could; unfortunately I have a foot injury that prevents me from doing this). Most of the full-time students I know in Wellington are also either receiving the allowance or a loan *and* working part-time in order to make ends meet. Considering the current state of the job market, I expect that losing an allowance might very well prevent some students from continuing their degrees.
    In addition, one thing I haven’t seen addressed is that some students need the student allowance to cover their living costs in secondary school, meaning that they’ve already used up part of their allowance before getting to university. This may be a rare circumstance, but it’s worth considering.

  • I stand to lose out on allowance next year, and the issue I have is not that I will have to borrow (I know that in the long run it will be worth it), but that the limit you can borrow is $40 less than the total amount for the allowance. The loss of accommodation benefit means that budgeting I had done for next year is redundant.