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The Great Fee Debate PT1: Why Student Fees Must Go

Nick Kelly



Students have been charged large fees to study at university since fees were introduced by the Labour Government in 1990. Since then fees have continued to rise.
At the end of the post-war boom there was considerable pressure put on the government by the business sector to reduce social spending on services like health, education, social welfare, housing, and electricity. There was a time when these were almost fully state funded. However, the past twenty to thirty years has seen the state constantly withdraw capital from key social services and reinvest it in private enterprise in order to boost profits for business at the expense of students and the working class.
The Fourth Labour Government’s attack on social spending was also an attack on workers, students, beneficiaries and pensioners. And tertiary education was one area that suffered. While there had always been a nominal tuition fee prior to 1990 (averaging about $129), this was offset by the fact that most students had access to allowances and wages in New Zealand that were higher in real terms than they are today.
Up until the introduction of Labour’s $1250 standard tertiary tuition fee, the fee for full-time full-year study at a New Zealand university was less than $300. However, for most students, 90% of the cost of this was met by the government through a fees grant that was paid through the student support system.
In 2006, students paid 34% towards the cost of public tertiary education. There’s no way we’d tolerate this in the primary and secondary system, and there’s no way we should tolerate it in the tertiary education system. What is argued by the universities and government is that recent fee increases, up to 5% under the fee maxima policy, have enabled tertiary fees to keep track with inflation and rising costs. Students have paid roughly 34% for the last five years, and in the eyes of university management and the government, the recent increases have kept fees the same in real terms. There are clearly weaknesses in this argument, especially in that 5% is above the current level of inflation (although inflation isn’t necessarily the best measure of rising costs).
However, the fundamental argument against fees is that the current levels are too high. The idea that the student is a consumer and education a product has been part of successive Labour and National Government’s agenda to continually privatise the tertiary system through introducing user pays and increasing tuition fees.
Students are forced to borrow thousands of dollars to study at New Zealand tertiary institutions. On a collective level, Victoria University students borrowed $39.4 million from the loan scheme in 2005 to meet upfront fee costs. And in the first quarter of 2006 alone, $37 million was borrowed by students here in order to pay fees. What’s more, New Zealand has some of the highest tertiary fee levels in the OECD.
Although the government has removed interest from student loans for those remaining in New Zealand, many students are forced to borrow to live because of a mean spirited and punitive means tested allowance system, face considerable and ever increasing weekly costs, and pay ridiculously high course fees. Large student loans affect the credit ratings for graduates, which makes it harder to buy a house. You don’t have to indulge in too deep an analysis to understand why home ownership rates are at the lowest level ever for recent tertiary graduates. Loans also reduce future disposable income. Upon earning over a certain amount, loan repayments are compulsorily deducted at 10% of your income. It is widely recognised that New Zealand has one of the harshest income contingent student loan repayment schemes in the world.
One justification for user pays is that there is a level of private good in tertiary study. However, the current user pays system actually perpetuates this problem. Under the current system there is no incentive for a graduate teacher to work in a low decile school or for nursing graduates to work in rural or provincial hospitals. The New Zealand taxpayer still pays for two-thirds of public tertiary education but gets less value than when the contribution was higher. Currently, many graduates go overseas (in order to earn higher wages) or aim for the highest paying jobs rather than work in areas that are more socially useful.
The universities and students are well aware that government funding has dramatically declined over the last couple of decades. Research by Scott and Scott (2004) revealed that funding to universities per domestic Equivalent Full-Time Student (EFTS) fell from $11,293 in 1980 to $9,473 by 1990. By 2002, this figure had fallen further to $7,367. It is fair to say that the fundamental problem and contradiction is between the government and students over the issue of student fees. From the outset, student fees have been the result of the government’s funding cuts and forcing institutions to make up the difference elsewhere. In most cases, universities have used their power to exploit the most vulnerable group on campus. The government gave university councils the responsibility to set their own fee levels in 1991, so the government could say it was the institution’s fault and keep its hands clean.
Tertiary institutions also waste a lot of money. In 2005 public tertiary education institutions spent a collective $28,162,551, according to recent research on institutional marketing published by NZUSA. Victoria University spent a total of $1.4 million on advertising. There is no evidence that the huge level of marketing that has crept in over the last decade has had much influence on people’s decision to study at a certain campus. The explosion in marketing, however, has occurred across the entire tertiary sector and is the result of the current EFTS (Equivalent Full-time Student) “bums on seats” funding model. While there is currently a review of the funding system for tertiary education providers, it is yet to be seen whether the outcome will result in any change to the current userpays tertiary system, or even a significant increase in government funding to reduce the fee levels that students are forced to pay.
However, for next year students should not have to pay fees to cover the rising costs to the university. It must be the responsibility of government to pick up this cost and realise their role in adequately funding public tertiary education.

Nick Kelly
Victoria University of Wellington
Students’ Association President
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of fees in New Zealand. Email editor@ salient.org.nz with your thoughts.