Being a student is pricier than ever

The rising cost of higher education is placing significant financial strain on students in New Zealand, with many struggling to cover basic living expenses. Recent experiences shared by students highlight a growing gap between available financial support and the actual cost of attending university.

Financial Pressures Mount for Students

International student Huda Jamali, studying animal science in Palmerston North, noted that while costs may be lower than in larger cities, they were still surprisingly high. She found university halls to be overpriced, opting instead for a room in a house costing $270 per week. A non-catered spot in halls costs around $230 weekly.

Did You Know? In 2005, a student allowance of $160 per week left a $20 buffer against essential costs of $140.

The cost of food has been a particular shock for Jamali, with fresh produce being especially expensive. Darcy Nelson, studying in Dunedin, described rent as “ridiculously expensive,” despite the often poor condition of housing, citing a rent of $205 in her second year rising to $220 in her third. Nelson faced difficulties securing employment and ultimately had to borrow additional funds from her student loan to cover living expenses.

Struggles to Make Ends Meet

Nelson’s experience reflects a broader trend. She described a situation where a friend relied entirely on her student loan and subsisted on a diet largely consisting of pasta. Disputes over utility bills, reaching as high as $900 for seven students, further illustrate the financial pressures. She ultimately returned to Auckland to live with her parents and work while continuing her studies.

Expert Insight: The increasing disparity between student support and living costs suggests a potential long-term impact on students’ financial well-being, potentially delaying homeownership and limiting savings.

According to Simplicity chief economist Shamubeel Eaqub, the situation has deteriorated significantly since 2005. While student support has increased by 86%, essential costs have risen by 220%. Rent has climbed to $193 per week and food to $96. This has resulted in a weekly shortfall of $8, even before accounting for textbooks, transportation, or social activities.

Looking Ahead

The Ministry of Social Development data indicates a 5.2% increase in students receiving financial assistance in the first quarter of last year, with an average payment of $1882. However, this assistance may not be sufficient to cover the rising costs. Students under 24 with parents earning over $69,935.32 annually receive reduced allowances, and those with parents owning assets exceeding $127,701.81 (while living at home) or $137,187.86 (while living away from home) are ineligible. Students can borrow additional funds for living costs, but these loans must be repaid.

Eaqub suggests that indexing student support to living costs, redirecting KiwiSaver subsidies, and addressing the housing crisis could alleviate some of the financial burden. Reimagining the student loan scheme, potentially through income-contingent repayment smoothing or bonded debt forgiveness for essential professions, could also be considered.

Frequently Asked Questions

What was the weekly student allowance in 2005?

The weekly student allowance in 2005 was $160.

How much has university tuition increased since 2005?

University tuition fees have increased by 113% since 2005.

What is the current average student loan balance?

The current average student loan balance is $24,000.

As the cost of education continues to rise, what innovative solutions might help ensure equitable access to higher learning for all students?