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New Zealand’s free university scheme fails to reduce inequality

Data show wealthy students benefit disproportionately from NZ$200 million annual borrowing holiday

February 13, 2023
Cowboy is thrown from his horse at the Auckland Rodeo, New Zealand to illustrate Free university scheme fails to reduce inequities in New Zealand
Source: Getty

New Zealand’s flirtation with free study has failed to make higher education any more inclusive, with people from the wealthiest neighbourhoods still up?to seven times as?likely to?start degrees as?their poorer counterparts.

Data from the first four years of?the Labour government’s signature fees-free programme show that inequities in?university commencements have?not shifted at?all, with admission rates firmly anchored to?socio-economic status.

The figures, released by the Tertiary Education Commission following information requests from The New Zealand Herald, substantiate a key criticism of free tuition: that the wealthy benefit disproportionately because they are more likely to attend university.

The data suggest that for every dollar spent to waive the fees of students from the poorer half of the community, almost four dollars were expended on the richer half.

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Meanwhile, a government offers no evidence that fees-free has had any significant impact on study loads or course completions, and it says a?2021 increase in tertiary participation rates is probably attributable to economic factors associated with Covid-19.

There is no evidence of significant growth in university student numbers before 2021, and while the fees-free scheme also covers sub-degree qualifications, its impacts on training numbers are difficult to track because a separate was established in mid-2020 as a Covid emergency measure.

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Introduced in 2018, fees-free covers a year’s tertiary study for those who have not undertaken significant post-school education in the past. Early in the pandemic, the government abandoned plans to extend the scheme to more years, having already redirected NZ$234?million (?122?million) from the fees-free budget because enrolment growth forecasts had proven over-optimistic.

Universities complained of stagnant finances, with fees-free eroding the government’s capacity to boost their funding, while students said inadequate income support was driving them into poverty.

Asked what tangible benefits fees-free had produced, the education minister, Jan Tinetti, said the main impact had been a reduction of?about NZ$200?million a?year in student borrowing. She did not say whether the government would support a continuation of the scheme beyond October’s election.

While the opposition National Party has previously pledged to abolish the scheme, its education spokeswoman, Penny Simmonds, is a free education advocate who established a localised when she was chief executive of the Southern Institute of Technology in Invercargill.

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Former education bureaucrat Roger Smyth, a fees-free critic, said the scheme was a “failure” but suggested that neither party was likely to scrap it because of the political cost. “As far as I?can see, it’s here to stay with its current parameters in the short term,” he said.

Mr Smyth said the economic returns from scrapping the policy would be muted anyway in the current period of high inflation. He said a substantial proportion of New Zealand student lending was never recovered because the debts are not indexed.

The New Zealand Union of Students’ Associations said it had originally supported the fees-free scheme but was likely to be “more hesitant” ahead of the coming election. “We don’t have a current policy position on it,” said president Ellen Dixon. “We’re focusing more on student debt and the cost-of-living crisis.”

Ms Dixon said the impacts of fees-free had been “muddied” by pandemic disruption. But she said tuition fees often contributed to students’ hardship even during their courses, because New Zealand’s unusually low repayment threshold of NZ$21,268 meant that some people were already paying off their loans before they graduated.

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“There is definitely an argument for fees-free…but it is clear that the administration may need some rethinking concerning its impact on our vulnerable students,” Ms Dixon added.

john.ross@timeshighereducation.com

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Reader's comments (5)

What a silly story. The policy is clearly popular with the voters but the authors seem to have some deep prejudice against it.
Economically, would we stop spending on road maintenance because the wealthy drive more than the poor do? Or would we say that because the wealthy drive more, all road use should be taxed at a flat rate per mile (the equivalent of a standard degree fee) - which would of course be regressive on the poor as they would pay more out of their income? Isn't this more of an argument for levelling up the education system, so more of the poor can access a free degree from university? That levelling up money would come from ordinary taxtaion, whoch hopefully is generally a progressive system, so that way the wealthy do stil, indirectly, pay more.
Inequality, inclusion and other changes must be measured over a good period of time - not a handful of years. I on't suggest the policy is wonderful, but I do suggest you need to invest more time before pronouncing it is not working.
I am amazed that the NZ Government implemented the scheme in the first place if the primary driver was to increase diversity - Gough Whitlam of blessed memory implemented the same back in the 70s in Oz with zip impact on diversity. Cost is not the cause of the lack of diversity; it is a far more complex issue and any solution will be just as complex.
This was a very poor policy. It has always been evident that university students are overwhelmingly drawn from professional, managerial, and business backgrounds. Essentially a university education provides a reasonable guarantee for those from a middle class background to maintain that status. And why not. But they should not be overly subsidised by the taxpayer, which is essentially a transfer of funds from lower-income people to help middle class families maintain their status - and of course do a good job in our businesses, professions, bureaucracies. That's why I think our current settings - without free fees - are right: the taxpayer subsidises university education because there is a public benefit, but then individuals are expected to pay as well (hence the loan scheme) because there is a private benefit (higher-paid jobs). If you want to help students from lower-income backgrounds, then you means test fees relief and income support while at university. And of course middle class parents can always help their offspring while at university, which very often they do. It was a daft policy of giving to those who already have. Far better to spend the funds on vocational education.

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