Open Letter to the University of Auckland Council

18 October 2013

ALL COUNCIL MEMBERS
University of Auckland
Private Bag 92019
Auckland 1142

Dear AUCKLAND COUNCIL MEMBERS,

I write to you as the President of the largest students’ association in New Zealand, the Auckland University Students’ Association (AUSA). I represent not just their interests, but the interests of every student pursuing and hoping to pursue tertiary education.

The purpose of this letter is to encourage you to seriously evaluate and debate your position on whether another maximum fee rise for 2014 is good decision making, to urge you to consider ALL of the information set out below and above all to encourage you to ensure that the relentless rise in fees is brought to a halt.

Fee Setting

Fee setting is an annual process where all members of Council need to seriously consider the broader implications created by another increase in fees. AUSA urges you to consider the implications another fee rise will have for domestic and international students studying in 2014. Education should be available based on someone’s ability to learn, not their ability to pay. Therefore Members of Council should take a strong, principled stand against increasing the financial burden already heaped onto students.

Students are the only sector in society expected to borrow money to live. This means they carry a tax-like debt burden around their necks from the outset of their lives. Accordingly only one in eight students are graduating debt free, the amount of money students owe has become so unrealistic that it is now incomprehensible that they would have to pay back what for many resembles a mortgage sized loan.

This government has been following a policy of selectively reducing the amount of money invested into tertiary education. While universities are struggling to keep their heads above water in a dynamic global environment, government funding is stalling. Instead, they are being licensed to squeeze more and more money out of students. If New Zealand wants to continue to be a world leader in education, government has to come to the party. Subsequently it isn’t sustainable to keep putting the cost of tertiary education onto the already think pockets of students.

The current policy structure automatically licenses the University to increase fees (this is a dangerous admission). Hence Council members have a fiduciary duty to the University and see maximising income to subsidise operating expenses. In 2006, the Professor Stuart McCutcheon said “Once again, we are left with a revenue shortfall we will have to make up through a combination of budget cuts and additional income from other sources.”- “other sources” presumably including squeezing more from students. Indeed without a commitment from the Minister of Tertiary Education to invest the right amounts of funding into education there will continue to be a shortfall in funding. It might seem that increasing student fees should not be the default option.

AUSA challenges this premise and calls on Council members to demand alternatives to raising fees.

The high level of tuition fees, lack of student support, and the need to borrow to live means that a large number of students have little choice but to utilise the Studylink Scheme to borrow money to pay for their education.

For some years, increases in student fees have compensated for the Government’s failure to increase funding annually at a rate proportional to inflation, let alone university costs. Recently, this has forced the most financially vulnerable participants in the tertiary system (the students) to make up the difference. Students are left in an unfortunate situation in which they have no choice but to pay increased costs every year. We understand that the University must seek alternative sources of income in the absence of sufficient Government funding. However, we believe it to be inappropriate that students continue to bear the burden of that inadequate Government funding.

For the vast majority of students, the only way to fund their studies is via the student loan system, which is used to pay both fees and living costs. For these students, increases in fees are not measured by an extra amount per week broken up over the cost of a year, but only by the total amount presented on a student loan balance.

Despite this worsening situation, higher fees are demanded every year from students. Over the last four years the cumulative rise in tuition fees at the University of Auckland equates to 21.6 percent increase. University students are paying more but getting less.

The average fee increase for domestic undergraduate and postgraduate fees is represented on the table to the right:

A Desperate Financial Situation

The Graduate Longitudinal Study, funded by Universities New Zealand, revealed last year that as many as 1 in 6 final year students were living in absolute financial distress: unable to afford basic accommodation, food and housing.

Evidence from the increasing demand for emergency hardship and welfare grants both within AUSA around the country has revealed that New Zealand tertiary students’ finances are at a crisis point. A survey, conducted by NZUSA of 17 students’ organisations highlight the stresses that students are under as they bear the brunt of recent government cutbacks to tertiary education. Thousands of tertiary students are finding that they don’t have anywhere else to turn. Since 2008 the demand for food parcels has increase 124 percent showing the increased demand for basic necessities. To respond to the increased changes we have expanded the service to provide family sized welfare packs for those with dependents as often the basics isn’t enough to get a family through for more than two days.

Depreciating Support for Course Related Costs

The $1000 for course-related costs that a student can borrow is unchanged from 1992. Inflation has depreciated that $1000 so that it is now worth just $624.66, or, to put it another way, goods that cost $1000 in 1992 would now, according to the Reserve Bank, cost $1,600.87

Limited Access to Allowances

Only one-third of full-time, full year, New Zealand students currently have access to allowances. The maximum entitlement per week for a student (aged under 24, without children, and living away from home) is $171.84. Those ineligible, or who get a partial allowance, can borrow through the Student Loans Scheme up to $173.56 per week. Those on the full allowance can borrow the $1.71 difference.

These amounts are derisory, given rent per week alone is often more than these amounts. Further, the fact that some students cannot survive suggests that, for many students, the assumption that their parents can and will support them is simply unfounded. In addition, since 2008 the government has cut eligibility to allowances to:

• Those studying courses of longer than 5 years (previously eligible if the course was of national significance

• New permanent residents.

• Postgraduate students.

• 1800 additional students each year through the freezing of the parental income thresholds.

Debt

Average graduating student loan debt is now $18,000, up from $15,500 in 2010. More than three-quarters of students used a loan to pay for their fees, up 10 percent over the last five years suggesting it has been harder for families to save for fees. Presumably for similar reasons, the number of students with a loan from their parents has been falling and is now below 15 percent.

Only 1 in 8 students expect to have no debt when they graduate. Even while borrowing, students believed that their student loan debt would impact on their ability to buy a house (72% cited this), deciding when to go overseas (69%), their ability to save for their future (65%), and whether or when to have children (37% - up 10% in the last decade).

Housing costs

The median rent for a 3 bedroom home increased by 5.7 percent last year (approximately $20 a week increase). Auckland needs to build 13,000 new homes a year to keep up with the growth of population. With only half of that being provided a housing bubble is pushing up the cost of housing. The demand for housing is so great students cannot afford to be picky, they are willing to accept less than acceptable standards of living to stay within their budgets. The average rental price for one room in Auckland Central is $262, far exceeding the maximum a student is entitled to borrow through the student loan scheme. The surrounding suburbs Mount Roskill and Balmoral had the most aggressive rent increases in the last quarter making it even more unaffordable as a student to live in a flatting situation.

New Zealand is currently experiencing a job-less recovery apart from in the construction industry in Christchurch, and for many of Auckland’s graduates that offers little salvation. If the returns through well-paid employment are distant then imposing less debt on students becomes even more important.

Of perhaps even more short-term significance, jobs for students while studying have been flat through 2013, slighter higher placements but duration of work and amount earned are down. With around 75 percent of students working while studying this has a more dramatic effect on their living situation even than access to state support.

Fees

Despite all the above, fees at New Zealand Universities have increased at 4 percent each year since that became the maximum, or 21.7 percent over the past five years. This has run ahead of increased government contribution (16.5% and flat in terms of per-student funding), and the budget of the institution. Accordingly, students have been paying more for less.

International Students

Between 2012 and 2013 the Government spent another $7.7 million on marketing campaigns to attract international students. Regardless of this, earthquakes, a global financial turndown and the good amounts of investments in tertiary education in East Asia have deterred international students from studying in New Zealand.

Attracting more international students aligns with Objective 13 of the University of Auckland Strategic Plan 2013-2020:

• Objective 13: A growing and increasingly diversified revenue base to support our activities.

The Strategic Plan continues, “Paramount among these is revenue from international education, research and philanthropy.” But students are attracted to institutions which have a vibrant campus culture, are ranked highly in international rankings, and have a diverse offering of support systems. At the University of Auckland we have seen a high demand on the health centre, longer waiting time before accessing critical counselling services, reduced access to computers and study space, an over subscription of people using recreation facilities, amidst a paradigm shift of seeing education as a commodity, and one of less and less value.

Being smart about the way we use our money to ensuring quality measures are in place would make the University of Auckland a more attractive institution.

Since 2006 New Zealand’s leading university has dropped 48 places in these world rankings. There is a real risk of permanent reputational damage for New Zealand. At the University of Auckland international student fees effectively subsidise all other aspects of the university. While the university has undertaken significant efforts to attract more international students a drop in the rankings puts that work, and the financial sustainability of the institution, at risk. This is a story being repeated throughout New Zealand.

Postgraduate Students

This would also be aligned with the University of Auckland Strategic Plan 2013-2020:

Objective 5: To establish a student body growing at 1% per annum with increased proportions of international, postgraduate taught and postgraduate research students

The Government announced in 2012 that it intended to remove student allowance eligibility for postgraduate study and study programmes over 200 weeks.

The justification for the saving was to save $105,269,000 over the next four years. This reduced support has increased the financial burden on postgraduate students. Postgraduate Enrolment numbers for 2013 are down as students are struggling to afford to continue with their studies directly due to financial costs.

We strongly disagree with the assertion that price does not have a significant impact on progression to postgraduate study. The high cost of undergraduate tertiary study, and the debt incurred at that level, is an immense disincentive to continue enrolment in postgraduate studies.

Equity reasons

An increase in tuition fees always results in inequitable outcomes for women, Māori and Pasifika students. This is because they generally have longer repayment times. Moreover, Māori and Pasifika graduates will on average earn less than Pākehā and/or male graduates.

Students who graduated in 2000 had on average paid off 21 percent of their loans five years after graduation. For Pasifika students however this was only 4 percent of their loans, despite their average loan being lower than European students.

Higher fees will increase the already long repayment times for these students. A number of Māori and Pasifika students are also forced to study at certificate and diploma level because of the cost for three-year degree programmes. These choices results in lower paying career options but with significant levels of debt. Students who wish to staircase into higher qualifications like bachelor’s degrees end up with large amounts of debt.

Such barriers will have detrimental effects on society and the economy as they will not see a diversity of students entering a wide range of careers, and we will not create a workforce representative of New Zealand society.

Not only is this inequitable for the students concerned, but we should be concerned about the gaps, quality and appropriateness of services and industries as a result of narrow student demographics in particular areas.

Fee increases are inconsistent with the Tertiary Education Strategy 2010 - 2015

Fee increases are inconsistent with the Tertiary Education Strategy 2010-2015. The strategy seeks to, among other things: create a knowledge-based society; ensure maximum educational opportunity for all New Zealanders; strengthen Maori and Pasifika development; and strengthen connections between tertiary education and the communities we serve.

Fee increases are inconsistent with parts of the Education Act.

Section 181 of the Education Act 1989 clearly outlines the duties of Councils in public tertiary education institutions.

Under this section of the Act, there is a strong argument to be made that relentless and exorbitant tuition fee increases will have a negative impact on current and potential students and work against the roles of Council:

(c)To encourage the greatest possible participation by the communities served by the institution so as to maximise the educational potential of all members of those communities with particular emphasis on those groups in those communities that are under-represented among the students of the institution

(f) To ensure that proper standards of integrity, conduct, and concern for:

(i) The public interest; and

(ii) The wellbeing of students attending the institution are maintained.

Fee increases impact on (c) as any increases will directly impact on the participation and opportunities in tertiary education for many students and will have the opposite effect of maximising educational accessibility for all members of the community.

Higher public education must not be limited because of a student’s inability to pay or aversion to debt.

Fee increases also impact on part (f). It is difficult to understand how the increase in fees shows concern for the public interest and students. The impact of fee increases is detrimental and is an extra burden upon students and their families.

While public tertiary education institutions certainly have a case for receiving additional revenue, it is unfair and ill-considered to simply lumber the cost onto students.

It is vitally important that members of council adhere to the duties entrusted to them under Section 181.

CONCLUSION

Vice Chancellors and Council members have often said that they are mindful of student debt while raising fees.

However, any decision to increase fees is directly voting for more student debt, increased impacts on the life choices of borrowers, negative impacts on our society and longer repayment times for all students, particularly women, Māori and Pasifika borrowers.

As a Council, you have the power to prevent thousands of dollars more in student debt from burdening the lives of our students and graduates.

To not raise fees – and most definitely not by an automatic default of 4% - would be a tremendous gesture of good faith on the part of the University Council towards the students of this institution. It would be an acknowledgment of the financial difficulties faced by students, and of the significant amount of debt that many are forced to take on in pursuit of an Auckland degree.

Most significantly, this is an opportunity for the Council to send a clear message to the Government that its failure to adequately provide for rising costs is unacceptable.

I do not believe it is the role of students to compensate for inadequate Government funding.

There is a wide consensus of opinion that the Government needs to commit to a significant injection of funding towards the public tertiary education system. In order for this to happen, however, students, staff and institution management will need to work together collectively.

In the interim, and until our collective goal is achieved, we do not believe that students should shoulder the burden of under-funding in the sector and be forced to pay increasing tuition fees.

Yours sincerely,

Daniel Haines
AUSA President

ENDS