Student loans and allowances policy "uncalled for and punitive"

25 May 2012

Students and their parents worried about bearing the brunt of fiscal austerity in today’s Budget are right to be concerned, an Auckland economist says.

Associate Professor Susan St John, from The University of Auckland Business School, says changes to student allowances are uncalled for and punitive, and will increase hardship for many who are clearly struggling now.

“There are large intergenerational shifts of wealth and power that should be challenged, and more asked of those who are already privileged,” Dr St John says.

“The baby boom generation will eventually be forced to give up some of their rights to wealth if they remain blind to intergenerational discontent.”

The increase of the repayment rate of student loans from 10 to 12% from an income threshold that will fall in real terms is going to have a harsh impact on many lower paid graduates, Dr St John says.

“It will be particularly bad for sole parents and those who can’t earn a full-time wage,” she says.

“The restriction of student allowances and the freezing of parental income for the income test will have a negative effect on the education of the very group that are already struggling and ought to be assisted more. This policy is desperately shortsighted.

“I hope that the Budget has no more nasty surprises for students and their parents.”