New Zealand

I. A Brief Description of the Higher Education System in New Zealand

In New Zealand, all post compulsory formal education institutions are called “Tertiary Education Providers.” Formal tertiary education is divided between public and private providers. The public tertiary education sector is composed of polytechnics that provide academic, professional and vocational courses; colleges of education that provide teacher education; Wananga teaching and research institutions that maintain and promote knowledge about Maori tradition according to Maori custom; and eight universities[1]. According to the Ministry of Education, as of 2000, there were 38 public tertiary institutions including eight universities.

Private tertiary education providers are composed of private institutions registered with the New Zealand Qualifications Authority[2] and other institutions receiving Ministry of Education grants. There are thousands of private tertiary education providers, of which 452 offer formal tertiary education programs (Ministry of Education, 2001a).

There were 264,353 formally enrolled tertiary students as of July 31, 2000 according to the Ministry of Education (2001a). Of these, 225,180 (85 percent) attended public tertiary education providers. More than 46 percent of tertiary students were enrolled at a university, 33 percent at a polytechnic, nearly 5 percent at a college of education, and 1 percent at a Wananga. Of the 264,353 students enrolled, 58 percent were full-time students.

The tuition fees of tertiary education providers have increased significantly in recent years. According to the Ministry of Education (1999), tuition fees for full-time and full-year students have increased by an estimated average of 12 percent per year since 1994. The government has recently offered an increase of 2.6 percent in government funding to those tertiary education institutions that agree to freeze tuition fees at 2001 levels. The following table (Table 1) shows samples of annual tuition fees in 2001 charged by different types of tertiary education providers.

Table 1
Samples of Annual Tuition Fees in 2001

(National currency New Zealand Dollars converted to $US
by 2000 PPP estimate $1 = NZD 1.46)

Institutions	Diploma	Annual tuition fees
University	Bachelor’s of Education	NZ$3,600 ($2,466)
	Law	NZ$3,500 ($2,397)
	Bachelor’s of Business	NZ$3,100 ($2,123)
	Bachelor’s of Science	NZ$3,970 ($2,719)
	Medicine & Veterinary Science	NZ$9,200 ($6,301)
Polytechnic	Bachelor of Nursing	NZ$4,680 ($3,205)
College of Education	Diploma of Teaching	NZ$2,250 ($1,541)
Private Institution	Nat Cert in Business Admin & Computing	NZ$3,200 ($2,192)

According to the Household Economic Survey (Statistics New Zealand, 2001a) the average weekly household income in 2000 was NZ$1,021, which would lead to an average annual household income of approximately NZ$53,240 ($36,466). Therefore, a family with an average annual household income needs to pay approximately 10 percent of that income in tuition fees for a financially dependent student.

The New Zealand government provides financial support for all students enrolled in tertiary education through tuition subsidies, student allowances and student loans. The tuition subsidy is applied to all tertiary institutions; the student allowance covers living costs for students from low-income backgrounds; and the student loans provide money for tuition fees and living expenses for students not eligible for student allowances.  The following table shows the breakdown of government support in recent years. 

Table 2
Annual Amount of Government’s Financial Support

Year	Tuition Subsidies	Student Allowances	Student Loans
1996-97	NZ$1,130 M. ($774 M.)	NZ$327 M. ($224 M.)	NZ$542 M. ($371 M.)
1997-98	NZ$1,144 M. ($784 M.)	NZ$344 M. ($236 M.)	NZ$657 M. ($450 M.)
1998-99	NZ$1,167 M. ($799 M.)	NZ$378 M. ($259 M.)	NZ$624 M. ($427 M.)
1999-00	NZ$1,262 M. ($864 M.)	NZ$376 M. ($258 M.)	NZ$715 M. ($490 M.)

The Student Allowances Scheme, introduced in 1989, provides living costs for students from low-income families. In order to get the allowance, students must be New Zealand citizens or permanent residents who are 18 years old or over, studying full-time in recognized programs approved by the Ministry of Education, and receiving gross incomes of NZ$135.13 or less per week.  In addition, since 1992, when students are under 25 years old and single, their parents' incomes have to be tested too. The allowance is disbursed on a weekly basis, and students have a lifetime limit of 200 weeks. The allowance levels depend on the students’ ages, incomes, and family backgrounds; whether they have dependents or not; are living with parents or not, have other family income (their spouse’s income and parents’ income), and so on.

The Student Loan Scheme, introduced in 1992, provides loans for tuition fees and other course-related expenses for students attending tertiary education. The Scheme is a government-funded income-contingent program. Borrowers must repay their debt through the tax system after they attain a certain income level.  The amount of repayment is decided by the amount of income earned above the minimum threshold of NZ$15,492 ($10,611). According to the Student Loan Scheme Annual Report (2001), the loan is composed of the following four components:

Compulsory fees or tuition fees

1) Students at public tertiary education institutions can borrow the full amount of their fees

2) Students at private education institutions can borrow a maximum of NZ$6500 ($4,452) each year for their tuition fees.

Course-related costs

Students can borrow up to NZ$1000 ($685) each year to cover costs related to their studies such as equipment, textbooks, and field trips.

Living costs

Full-time students who are studying for no less than 12 weeks and cannot get the allowance can borrow NZ$150 ($103) per week as living costs.

Administration fee

Every time students apply for a new loan, they are charged NZ$50 ($34) for an administration fee and this charge is added to their loan balance.

The Ministry of Education, Department of Work and Income, and Inland Revenue are responsible for the loan scheme. The Ministry of Education is responsible for strategic policies about the loan scheme, while the Department of Work and Income is responsible for its administration and the distribution of the loans to students and the Inland Revenue is responsible for maintaining the loan accounts, assessing the loan amounts and collecting the loan repayments.

According to the Student Loan Scheme Annual Report 2000/01, in 2000, 55 percent of the total students who were eligible for student loans, borrowed from the loan scheme. Fifty percent were from universities and 14 percent were from private training establishments. In 2000, the average annual amount borrowed was NZ$6,222 (US$4,262) (Matthews, 2002).

As mentioned previously, the Student Loan Scheme is an income-contingent program that collects debt payments through the tax system as borrowers achieve certain incomes. When a borrower’s annual income is over the repayment threshold – NZ$15,492 ($10,611) for the 2000-01 tax year –, he or she must repay at the rate of 10 cents to every dollar (10 percent) earned over this amount.  For example, an office worker whose annual income is NZ$35,000 ($23,973) must repay NZ$1,951 ($1,336) through the tax system. However, when a borrower has no income or income lower than the repayment threshold, he or she does not need to repay any money. Also, when a borrower goes bankrupt or dies, he or she is absolved from the repayment obligation. 

Interest on the outstanding balance accumulates daily and is compounded annually. Then, it is added to a borrower’s loan balance.  The total interest rate is composed of a base interest rate and an inflation adjustment rate and, therefore changes every year.  However, as the government is currently examining the method of setting the interest rate, the interest rate for the 2000-01 income year was fixed at 7 percent (6.1 percent as a base interest rate + 0.9 percent as an inflation adjustment rate).

Starting in 2000, a borrower whose annual income is less than NZ$24,596 ($16,847) receives a full (a base and an inflation adjustment) interest write-off in-school years. When the borrower has no income or income less than the repayment threshold, the borrower has no repayment obligation and all the base interest charged is written off.  In addition, 50 percent of the repayment obligation is credited to the base interest charged and the other 50 percent is credited to the principal, once the inflation adjustment interest has been paid.

II. Estimated Expenses of Higher Education in New Zealand

New Zealand
Higher Education Expenses Borne by Parents and Students
First Degree, Academic Year 2000 -01

[National currency New Zealand Dollars converted to $US
by 2000 PPP estimate $1 = NZD 1.46]

References

LaRocque, Norman (2001). Shaping the Tertiary Education System: An Assessment of the Second Report of the Tertiary Education Advisory Commission entitled “Shaping the System,” Education Forum, Arthur Andersen: Wellington.

Ministry of Education (1999). New Zealand's Tertiary Education Sector: Profile & Trends 1999. Available at http://www.minedu.govt.nz/web/
downloadable/dl5243_v1/tertiary.pdf

Ministry of Education (2001a). Education Statistics: News Sheet, 11:2 July. Available at http://www.minedu.govt.nz/web/downloadable/dl6037_v1/Vol11_no2.DOC

Ministry of Education (2001b). Student Loans [Online]. Available at
http://www.minedu.govt.nz/web/document/
document_page.cfm?id=5806

Ministry of Education, Inland Revenue, and Department of Work and Income (2000). Student Loan Scheme Annual Report: Incorporating the Financial Report to 30 June 2000. Available at www.winz.govt.nz/pdf/student-loan-report.pdf

Matthews, Rebecca, Research Officer, New Zealand University Students Association (NZUSA), email of March, 2002.

Statistics New Zealand (2001a). Household Economic Survey [Online]. Available at http://www.stats.govt.nz/__4c2565af000bec19.nsf/
173371ce38d7627b4c25680900046f25/
4c2567ef00247c6acc256af800093ece?OpenDocument

Statistics New Zealand (2001b). Quick Facts: People [Online]. Available at http://www.stats.govt.nz/domino/external/web/
ProfileNZ.nsf/htmldocs/People