Cost Breakdown
In total, if Student Allowances were to become universal, and were increased by $100 per week, the estimated cost difference between the status quo and a universal system in 2021 would be just over $2.5B.
Weekly Amount
Currently, (FY April 2020 – March 2021) the maximum a student can receive for weekly living costs, through the Student Loan Scheme, is $239.76 and the maximum a student (not living in their parents’ home) can receive through a Student Allowance and Accommodation Benefit is $370.51.
However, the cost of living in Wellington, based on mean rents (comparable for Auckland and Dunedin) and based on information provided to students on the cost of living by Victoria University of Wellington is $460 for a single student with no dependent; or $1,380 for a couple with children.
In addition to making it universal, we recommend a $100 increase to Student Allowance entitlements, which will ensure the weekly allowance payments cover the basic costs of living. The new maximum entitlement for a single student not living in their parents’ home would be $470.51, a 27% increase on the current, 2020, rates. This new maximum recommended rate of $470.51 per week is the rate our estimates, presented in this report, are based on.
Total Cost
Under the current Student Support Scheme, the total projected costs for the financial year ending March 2021 is around $1.15B, which is made up of $593M Student Loans cost of lending and $563M in Student Allowances. The total amount of Student Loans paid out is comprised of $517M of Student Loan Living Costs, $830M fees and $85.8M course-related costs.
In comparison, the projected costs of a UEI, if it were to be implemented from the start of 2021, would be a total cost of $3.7B, comprised of $3.4B allowance and $379M Student Loan cost of lending.
Therefore, the difference in the total forecasted cost between the current student support scheme in 2021 and the UEI in 2021, is therefore just under $2.6B.
