Get a drink, it's on StudyLink
Three years of study and $15,000 worth of living costs - all of it spent on drinks at the pub. It’s the stereotypical student spending we’ve all heard about. Every student seems to know someone who frittered away their allowance, or someone else who claimed living costs and earned interest at the government’s expense. With student debt at a record high, In Unison asked students of all ages from around Auckland to shed some light on what they really spend their StudyLink money on.
By Jessie Colquhoun and Amanda Haxton
The Spender:
Rows of neatly pressed designer clothes hang in Serena McCloud’s* closet in her parent’s waterfront home in West Auckland. Parked outside is the late model Volkswagen polo she uses to ferry herself to swanky bars, an exclusive gym and into town and back. After graduating from AUT University she bought a $500 Deadly Ponies designer handbag with her first pay, as a “treat”.
Serena may be the polar opposite of a stereotypical student. After a two-year OE to London, she returned home and enrolled in a postgraduate diploma. Having just turned 24 she qualified for the mature student allowance and got $150 a week free from the Government. On top of this, she was a nanny for two wealthy Remuera families, earning $17 an hour, under the table. Living with her parents, Serena says she was fortunate that she paid nothing on rent, board, food or bills. “I would have to pay for my clothes and social outings”.
“The money was spent on clothes, mostly designer dresses that I would lay-by and pay off week by week. It would also go on petrol, on which I would spend at least $50 a week, because I live in West Auckland and would travel into the city everyday. I also spent money on lunches, sushi, dinners with friends, drinks, movies, a gym membership, social outings and general living.”
In 2009 the age at which StudyLink deemed you a “mature” student decreased by one year, applying to students 24 and over. If she studied a year earlier Serena’s parents’ high income would have made her ineligible for the allowance. Instead, she became just one of the many students whose frivolity contributes to the highest ever government spending on allowances in almost 20 years. Ministry of Education figures released last month show that the number of allowance recipients jumped by 26 per cent between 2008 and 2009, compared to five per cent each year between 2006 and 2008.
The Saver:
In Epsom, at just 18, Rachel James’* passport is decorated on almost every page. Each stamp tells the story of an overseas trip: to San Francisco, around the Pacific Islands, Los Angeles, Singapore, Portugal, and to Australia more times than she can count. Unlike Serena, who keeps her money where she can see it - hung up in her closet - Rachel chose to work up to 20 hours a week part time. But Rachel still gets living costs from the Government, which go promptly into a high interest earning savings account that she can’t touch. The idea is that the interest she earns on $165 per week will eventually pay off her student loan
Rachel got the idea from her older sister, who claimed the $150 a week in living costs for three years of study and at the height of interest rates, was earning almost $100 a month on the lump sum she kept in a separate bank account.
The Parent:
The lives of these two students could not be more different to that of 41-year-old Mathew Ryan*. The father of three went back to studying in his mid thirties at Unitec. Unlike Rachel and Serena, who had copious amounts of disposable income, he struggled to make ends meet. Mathew was eligible for the over-24 allowance but he also earned up to $1000 a week under the table - a fact he didn’t disclose to StudyLink: “It’s the only way you can survive”.
A StudyLink spokesperson from the Ministry of Social Development says there are no specific restrictions relating to the number of hours someone can work while receiving a student allowance. “There are however limits to the amount a student can earn. This is because the student allowance is an income tested payment. If the student obtains funding through deliberately making false declarations about their circumstances, however, that is fraud. The Ministry of Social Development has a zero tolerance policy to fraud. In every case where there is planned or deliberate fraud, we will prosecute.”
This means Mathew and Serena, who worked under the table, committed fraud. And got away with it. Not everyone is so lucky. In the past 12 months The Ministry has successfully brought cases against 356 students who were found to have abused the student loan and student allowance schemes. The Ministry Spokesperson says a false statement or claim is a breach of the student loan contract and can result in restrictions on future access to student loan payments. “Serious cases may be referred to the police for prosecution.”
Getting caught was a risk Mathew knowingly took. He says there’s no way he would have been able to support his children on just his partner’s income, the allowance, and the approximately 10 hours a week of part time work StudyLink allows. “Without the allowance I would have needed to find part time work, not just one but maybe two or three jobs. I see a lot of people break away from their studies because they can’t afford to live.”
The Struggler:
The inequalities between students are impossible to miss. How can Serena and Mathew be eligible for the same amount of money from StudyLink simply because they are both older than 24? It hardly seems fair. Serena is the first to admit she didn’t need the allowance to live. “I was lucky and had a very generous family who looked after all those things so I didn't have to worry about them. I didn't have to pay any food or rent costs. If I did have to factor those into my finances then yes, I think I definitely would have needed the money to survive.”
It’s this inequality that has recent graduate Karen Miller* raging mad. The bright 22-year-old studied at AUT University and Massey University - a long way from her home in Mount Manganui.
When Karen swapped her trusty jandals for textbooks, she never thought studying and trying to earn a living would be so hard. It frustrates her that someone like Serena could be a student and afford designer dresses while she struggled to pay the rent.
Because her parents earn under the threshold of eligibility, Karen received the student allowance; between $173 and $195 per week for four years that she doesn’t have to pay back. She was able to get the full allowance because she lived away from home, but students still living with their parents can receive a slightly smaller sum if they meet the criteria.
Karen’s parents were unable to support her financially in any way during her four years of study, so the majority of her allowance was spent putting a roof over her head. “Most of it went on rent because rent in Auckland is really expensive. The rest of it went on power and water and things like that. I might have had like $20 left over occasionally which was generally for food, course costs or petrol.”
She worked the maximum of around 10 hours a week and most of this money went to resources for her design degree, which has very high course costs.
Unlike Mathew and Serena, Karen didn’t escape StudyLink’s watchful eye. She says whenever there was the slightest discrepancy with her work hours they would hassle her. “If you go over, or if they don’t know that you’re working, or if there is any sort of minor discrepancy in what you’re earning from IRD and what you told StudyLink, then they hassle you. Hassle the shit out of you.”
How can a few extra dollars a week cause so much concern for StudyLink while Rick’s $1000 weekly earnings went unnoticed? The Ministry Spokesperson says it’s because only randomly selected applications require evidence of all income and any subsequent income changes.
“The Ministry of Social Development has a comprehensive suite of data matches with other agencies to detect non compliance and fraud including: Inland Revenue, Customs, Housing New Zealand, the Department of Internal Affairs and the Department of Corrections. Where a student is matched as having circumstances other than those they have declared to StudyLink, this is investigated and appropriate action taken.”
It’s no surprise then that Karen, who was legitimately eligible for the allowance, feels annoyed that her income was constantly scrutinised when she genuinely needed it to get by. She knows people like Serena who received the allowance and bought designer clothes and those like Rachel who invested StudyLink’s money. Both make her really “pissed off”.
“I think the aim of the student allowance is to help people whose parents can’t help them when they are studying. If you don’t need help then you shouldn’t really be taking it and StudyLink shouldn’t really be giving it to you either.”
“When other people don’t even need it and rip off the system it’s frustrating to people who actually genuinely need it. And there’s the risk that those people ruin it for everyone and people who need it might not be able to get it one day.”
StudyLink agree that the money should be used for the purpose for which it was intended. However, “it is up to individual students to decide exactly how they use the funding provided” says a Ministry Spokesperson. Because students who receive the student allowance are income tested, The Ministry believes it is “likely” that their financial circumstances would dictate that this money be spent as intended.
However, there remain discrepancies with how the money is spent, even between siblings whose parents have the same income. Karen’s younger brother was also eligible for the student allowance but chose to study in Hamilton. “Hamilton is a really cheap city to live in so he spent around half his allowance on what I spent it on - living - and then the other half on whatever he wanted to do, going out, course costs and more than anything, booze.”
Alcohol and students seem to go hand in hand, at least if you listen to the mainstream media. You could argue it’s as big a part of the student lifestyle as last minute cramming sessions for exams. As a mature student this is something Mathew didn’t really get involved with.
He says he never “drank away” his student allowance, unlike many students he knew.
“Some people really need [the allowance] and then other people throw it away, spending it like that. It’s like ‘What the hell?’ What a waste!”
The Drinker:
24-year-old Dillon McGill* is unsure whether his three years of university could be seen as a waste. He lived at home with his parents in Manuwera during his three years in a communications degree at AUT University. He received $50 a week in living costs and two $1000 grants which were supposed to go towards his student loan. He spent it all on alcohol.
When he finished studying, Dillon had a $20,000 student loan and, even three years after graduation, estimates it will take another nine years to pay off. By then he’ll be 33. But even with the gift of hindsight and a massive loan that will plague him for almost another decade, Dillon says he wouldn’t change a thing. In fact, he wishes he got the full amount offered to him in living costs - $150 a week, just so his life as a student would have been “easier”. “I wouldn’t have had to rely on my mates for rounds, I could have saved more and I could have moved out of home earlier.”
Dillon may have spent his Government-funded living costs on something StudyLink didn’t intend him to, but still Dillon insists that the people investing their allowances and loans are the ones “in the wrong”.
That’s something Rachel hotly disputes. “I work hard. I work 20 hours a week to fund my lifestyle. It’s my money, why shouldn’t I be able to spend it that way? I know so many people who got living costs or allowances and spent it on hair straighteners or longboards and yet I’m in the wrong for being smart with my money? That’s just ridiculous.”
The Student of Separated Parents:
20-year-old Lisa Kim* is a little more sympathetic towards Rachel and Serena.
Lisa is in her final year of her degree at Unitec and living at home, but is still eligible for the student allowance because her single mother is unemployed. The $129 she receives each week goes on day-to-day living costs like petrol, food and her car. She tries to contribute at home, but her mother doesn’t want to make her pay board while she’s still a student, despite this being the purpose the money is intended for.
Lisa says StudyLink has never questioned her spending. “They don’t really check up on you or anything like that. Heaps of people get the student allowance and spend it on piss.”
“I guess it’s not fair, but then again they got given the money so it’s their option to spend it as they like. If they spend it on piss and then don’t have any money and get an overdraft or a credit card and get into debt then it’s their own fault really.”
Lisa says, even though her parents’ earnings are under the income bracket, they would probably help her out financially if the student allowance wasn’t available. In comparison, Rachel’s parents, who could comfortably afford to pay for her fees, but would rather she got a loan and worked part time to learn the value of money. The complex individual circumstances of each student make the allowance system a nightmare to administer; how can you determine true need based solely on a printed figure?
Lisa may think frivolous spending is a student’s “own fault” but in reality every New Zealand taxpayer carries the burden of student debt. Last year 82,600 students received allowances at the tax payers expense and 37 per cent of student allowance recipients also received living costs.
New Zealand Union of Student Associations (NZUSA) Co-President Pene Delaney would like to see even more money going towards students’ living support. NZUSA believe support, in the form of student allowances, is integral to academic success. “While more students are getting allowances, the vast majority are still excluded due to parental-income means-testing till the age of 24.”
“More students are continuing to borrow simply to cover basic living costs, resulting in the vast amount of student debt that individual students bear, and the collective student debt of $10 billion now held in the community. We hope the Government will further lower the unfair age threshold of parental means testing in the next budget,” says Delaney.
In 2009 expenditure on allowances increased by $118 million (30 per cent) and reached $516 million. Tertiary Education Minister Steven Joyce has said the Government will lend out about $1.54 billion in student loans in 2010. "While we are committed to interest-free student loans, it is important we are fair to taxpayers and remove any perverse incentives from the scheme as it stands," says Joyce.
"If we take into account student allowances and the student loans we lend to students to pay for fees and living costs, we spend a total of 42 per cent of our total tertiary budget on student support," he says.
Rather than tighten up the eligibility assessment the government has chosen to introduce other measures to hold the tertiary sector accountable for its spending. These include a lifetime limit on student loan access, making permanent residents and Australians live in New Zealand for two years before getting loans and requiring students to pass more than half of their courses over two years to be able to keep borrowing. "These measures strike a fairer balance between supporting students and respect for taxpayers that supply that support,” says Joyce.
Some students, like Karen, worry that students who abuse StudyLink’s services have put living costs and allowances at risk of being cut. Already many students believe the high cost of living is a deterrent to undertaking tertiary study. Horror stories of eating nothing but noodles for a month are aplenty and it certainly doesn’t make studying more attractive. Mathew thinks the financial barrier puts many older students off returning to tertiary study. “It was quite hard, I was staying up until 2am, 3am at night catching up on course work.”
Dillon and Rachel, neither of whom spent their money on what it was intended for, are still adamant the government should be doing more to help students. “Uni is tough,” says Dillon.
“The Facebook group rings true: ‘University, it’s like being on the dole but your parents are proud of you’. That so accurately describes my life,” he says
*For obvious reasons names in this article have been changed.
Editor’s Note: The spokesperson from the Ministry of Social Development told In Unison “If you have information suggesting specific individuals are [committing fraud] then please supply it to the Ministry and we will look into it, as we do for all allegations.”
To maintain the confidentiality of our sources we did not comply with this request.