Radical education shake-up rejected

Report suggesting adding interest to student loans called ‘ridiculous’

Aproposal to reintroduce interest on student loans has been shot down by the Government before it reached final report stage. The proposal is one of a raft of recommendations put forward in a draft report by the Productivity Commission, released this morning, which is heavily critical of the current model of tertiary education and how it’s funded.

The 400-page draft report, New Models of Tertiary Education, suggests a radical shake-up of the sector, with some controversial ideas, which have already been knocked back across the political spectrum.

It proposes a shift from a Government and institution focus to a student-centred approach, allowing for more flexibility and innovation in a bid to keep up with fast-paced changes in the modern world.

The report levels a number of criticisms at the current New Zealand model, labelling it inflexible and “not well placed” to respond to uncertain future trends. Tertiary education was “more responsive to Government than students”, had “considerable inertia”, and lacks innovation, it said.

The funding model also comes in for criticism. The commission says the Government should charge interest on future loans at a rate that covers the cost of the Student Loan Scheme.

The Government currently writes off about $600 million of student debt every year, it said — or about 39 cents for each dollar lent.

However, this was ruled out by Tertiary Education Minister Steven Joyce last night, who said the Government “won’t be putting interest back on student loans”.

Both Labour and the Greens were against the proposal, with Green Party tertiary education spokesman Gareth Hughes branding it “ridiculous”.

Alistair Shaw, executive director of the New Zealand Union of Student’s Associations, said the proposal was unworkable, and would make saving for a first home or a family even more difficult for young people.

Among a number of recommendations to the sector, the commission also proposes a radical idea — the introduction of a Student Education Account. It would see the $2.8 billion of Government money spent on tertiary tuition and training every year split evenly among every 16-year-old in the country — giving them about $45,000 each — to spend on courses of their choice.

The idea could “transform our education system” to one responsive to the needs of students, improve access to education, provide more options, and drive innovation, the report said.

However, the idea was roundly denounced by students, politicians and university leaders who called it unworkable, and likening it to a freemarket privatisation model.

Joyce — who commissioned the report with Finance Minister Bill English — also ruled out the proposal, saying it was “unlikely” the Government would adopt it.

Universities New Zealand executive director Chris Whelan said similar models in other countries “often ended up becoming incredibly expensive”, such as in the US.

The report hit on a number of relevant problems facing the sector, but did not get the solutions right, a number of parties told the Herald.

Whelan said the report was “deliberately provocative” to spark a conversation, but acknowledged it picked up “a few of our concerns”.

Labour’s education spokesman, Chris Hipkins, said deregulation and privatisation was not the way to address inequality and lack of innovation in the system.

“The commission too closely associates the value of learning with monetary measures, and in doing so overlooks the wider public good.”

Hughes said the report was a “mixed bag”, with some good suggestions around the need for more autonomy for universities, but “bad suggestions” such as deregulation and self-accrediting.

The report comes after at least six of the country’s eight universities revealed they would be increasing tuition fees by 2 per cent for the 2017 year, and Labour claimed the amount owed in student loan default payments by overseas borrowers now exceeds $1 billion.

The Productivity Commission is an independent Crown entity, tasked with carrying out in-depth reports on topics selected by the Government.

Submissions for feedback on the commission’s report close on November 21. A final report is expected by the end of February.