“Anti-poverty” group suggests increasing student debt

We live in strange times. In a report released earlier this week, the Child Poverty Action Group – a group formed with the aim of reducing poverty – actually suggested re-introducing interest on student loans.

The report did detail the increasingly desperate situation facing all but the most well-off students. Student allowances remain just pitifully low – the maximum entitlement is just $175.10, with an accommodation supplement of $40 per week for those who qualify. Those who don’t qualify are forced to borrow to live to the tune of $176.86 per week, with no accommodation supplement. Unsurprisingly students have severe difficulty making ends meet. Little is left over for essentials food, clothing and heating after laying the rent – most visibly in Auckland where the crisis of affordable housing us most severe and student rents average $218.

Furthermore, government policy over the has reduced the number of students who qualify for an allowance. By measures such freezing the combined parental income threshold at $55,028 until 2019 and reducing lifetime eligibility from 200 weeks to just 120 for students over 40, the government had been able to cut eligibility for 20,000 students, reducing the percentage of students receiving support from 43.1% in 2010 to 35.7 in 2015. 33% of students get no state assistance whatsoever.

The Child Poverty Action Group’s solution however, is less than inspiring. Faced with the extremes of student poverty, the report suggests funding increased allowances by charging interest on student loans.

Not only do such “buy now, pay later” ethos fail to challenge the privatisation agenda that has contributed growing all kinds of poverty and inequality, it is unlikely to even help the majority of students, even in the short term. While there is some evidence that a degree does enable graduates to earn slightly above national median, university education is not the passport to a well paying job for life that it once was. More than a third of graduates do not find work related to their area of study and an increasing number of graduates remain trapped in poorly paid manual or clerical work years after graduation.

Responding to the report, the government perhaps inadvertently laid bare the logic behind their position. Speaking to the New Zealand Herald, Education Minister Steven Joyce ruled out extending support for students because student numbers are “at or near record highs.” Put simply, the government thinks there are too many students. Rather than building a more highly skilled workforce and paying the wages that such a workforce would demand, the National Party and it’s backers in the business class would prefer that a significant portion of today’s students join the dole queue or seek lower-paid, unskilled work. That would be more profitable from their viewpoint.

But there is an alternative to both the nightmare of student debt and highly unequal, low-wage society. In spite of years of sluggish growth after the Great Recession, corporate profits are at an all-time high, yet corporate taxes are historically low. A saner policy would be to redistribute the wealth, tax the corporations and plow some of the revenue into the education system. The rest could be spent on research, hospitals, schools and public projects that will both ensure decent jobs for graduates and contribute to the public good. All kinds of poverty could be eliminated – it just requires the political will.