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Salient. Newspaper of the Victoria University Students' Association. Vol 42 No. 7. April 9 1979

Editorial

page 2

Editorial

It's about this time of year, funnily enough always around budget time, that the possibility of replacing bursaries with a system of student loans is considered. Indeed it was this very scheme that Alan Levett used to re-project himself into the public arena several weeks ago. As yet no-one seems to have heeded his call. Hopefully no-one will.

Levett, along with others, has argued that a system of student loans will somehow make university education more accessible to all. While it is certainly true that under the existing bursary system, students from wealthy backgrounds get a very easy ride, often using the bursary as mere pocket money, the overall situation is hardly likely to improve if loans are introduced.

The basic flaw is that, while bursaries are paid out independently of need (save in the case of hardship allowances), loans go to the opposite extreme. A student will only take out a loan if s/he absolutely has to. As loans, by their very nature, have to be repaid, this will mean that students from poorer backgrounds will leave university with the heaviest burden of debt.

Students who enter university knowing that their parents are unable to give them a significant amount of assistance, and that they will have to survive almost solely on holiday earnings and loans, may be reluctant to enter university.

While loans might reflect need more accurately than the present bursary system, it will do so by disadvantaging those who most need aid. It offers them the money with the one hand, and tics a noose around their neck with the other.

Expected Costs

The only way that students could expect to avoid leaving university with a massive deb hanging over their heads, is to use their holiday earnings to repay, at least part of the loan they have taken out that year. The Survey of Student Income and Expenditure which is currently being done had produced some preliminary figures that are illuminating in connection with any proposed loan scheme.

The survey showed that students have an average expenditure of $1100 during the academic year, irrespective of age or sex. First year students earn on average $500 during the vacation before they arrive at varsity with an additional $150 in miscellaneous income, for second and third year students the figures are $760 and $170; $850 and $170. Using these figures and assuming an interest rate of 12½% on the loan (ie. Levett's current interest rates), with a few assumptions about the cash flow, and further that the only expenses that students incur during the holidays are rent, food and power, the remainder going to pay off loans, the "average student" would leave university after three years of study with a debt of $2,500 hanging over his/her head.

And if those figures aren't bad enough, there are other factors to consider. Firstly these are average figures, therefore while there are many students who would finish university better off than these grim figures suggest, a large number will actually be worse off. Will this latter group be able to survive at university or will an already elitist system turn even more so? Some groups that would suffer particularly can be identified: the two major groups being female students, who on average earn a total of about $200 less than the average holiday earnings quoted here. Instituting loans, with women facing the employment difficulties that they are, exacerbated by the current economic climate, would make universities even more male preserve than they presently are. The other group who would suffer are students at technical institutes, who, as their academic year is five weeks longer on average than that of university students, also have significantly lower holiday earnings.

The other frightening thing about these figures is that they assume that students have to spend no money in the holidays other than their essential living expenses. No Christmas presents, no clothes, no holidays, no entertainment. The survey doesn't reveal the amount that students are wont to spend on these items during the holidays. But for every dollar that the average student spends, the more above $2,500 will be the eventual debt be.

Another factor that those who advocate loans conveniently ignore is that, if the Government is to finance students through university using a loans system, it must ensure that there are the jobs available at the end of it for them to repay their debts. With the present economic system it is highly unlikely that the market as it is will be able to provide enough jobs for all the graduates to repay their loans from. At present the only reason graduate unemployment is within reasonable bounds is because of the large number that go overseas. Obviously this flow would have to stop under a loans system.

Other Problems

But even if we were to harden our hearts to the prospects of students becoming the best friends of every finance company in the country, there are many other objections to the loans scheme. In particular it commits students to rush out to work in New Zealand as soon as they finish their degrees. This means that the many students who shoot off overseas for several years after graduation before "settling down" would now, if they wished to go overseas, have to skip the country and would probably never be allowed to return. Clearly this benefits no-one.

Other students, rather than shooting off into the wild blue yonder, become temporarily involved in a variey of activities which have nothing to do with the vocation they have mapped out for themselves. Activities like student politics (and student newspapers), community work to give just two examples. With a massive debt looming overhead, few students would be able to take a year off to become involved in these often poorly paid activities.

But as well as affecting the life-style an future aspirations of individual students, loans will have a marked effect on the [unclear: stuture] of our Universities.

If one enters university takes out substantial loans in anticipation of gaining a well-paid job on leaving university, what courses are likely to be favoured?

Financial considerations, for all but the very wealthy, will preclude the study of those general subjects like English. History, Language, Philosophy. Those degrees that don't place students in a leading position in the race to scoop up the $20,000 a year jobs are likely to be ignored.

Another form of hardship is imposed on students who want to go on to complete other degreees, second degrees or honours degrees. According to bursary regulations many of these combinations are expected to take five or six years to complete I haven't got around to calculating what the total debt would be at the end of such a period, but a figure of around $6000 or $700 seems not unrealistic.

While our bursary system is riddled with anomolies, the level is wrong and the abatement iniquitous, the concept of a "grant in aid" is far superior to one of loans. With a bursary soms students are excessively advantaged. Under a loans system, the wealthy won't be able to live off the fat of the system, but this is done by making poorer students suffer considerable hardship. Because of the greater flexibility it allows students in their selection of courses, duration of study, and what they do when they leave university, students should now be sucked in by the rhetoric of Levett and others on loans. The end result of loans [unclear: wil] be to make tertiary education even morel [unclear: el] list and less humane than it is at present.

Peter Beach