Tertiary and international education initiatives and savings

Details of the main tertiary and international education initiatives and non-departmental savings announced in Budget 2010. Further information can be found in the Tertiary factsheet.

New initiatives summary

InitiativeDescription
International Education
International Education Promotions

Operating funding
  • 2010/11 $2.000m
  • 2011/12 $2.000m
  • 2012/13 $2.000m
  • 2013/14 $2.000m
Four Year Total $8.000m
Increased funding to maintain international education promotion activities to aid the recruitment of international students will continue. This is needed to maintain increased student demand for New Zealand’s education sector, given strong and growing international competition in this market.

Total Crown funding for international education promotions will be stabilised at the 2009/10 level of $3.45 million.
Tertiary
Responding to Tertiary Education Enrolment Pressures

Operating funding
  • 2010/11 $35.549m
  • 2011/12 $51.126m
  • 2012/13 $48.334m
  • 2013/14 $45.710m
Four Year Total $180.719m

Capital funding
  • 2010/11 $21.832m
  • 2011/12 $26.940m
  • 2012/13 $24.660m
  • 2013/14 $23.544m
Four Year Total $96.976m
This initiative maintains enrolment baselines at universities, institutes of technology and polytechnics (ITPs), and provides for extra enrolments in 2011.

Funding for approximately 1,735 Equivalent Full-Time Student (EFTS) units at universities and 3,173 EFTS at ITPs above what was previously budgeted.  This provides 765 EFTS at universities above this year’s record number of places and 455 EFTS at ITPs above 2010 core levels.
Student Achievement Component Rate Increase

Operating funding
  • 2010/11 $20.953m
  • 2011/12 $41.933m
  • 2012/13 $41.963m
  • 2013/14 $41.989m
Four Year Total $146.838m
This initiative provides an increase of 2.2% to Student Achievement Component (SAC) funding rates in 2011.
Setting the Annual Maximum Fee Movement in 2011

Operating funding
  • 2010/11 $2.984m
  • 2011/12 $9.578m
  • 2012/13 $15.643m
  • 2013/14 $22.219m
Four Year Total $50.424m

Capital funding
  • 2010/11 $5.554m
  • 2011/12 $18.070m
  • 2012/13 $30.122m
  • 2013/14 $43.540m
Four Year Total $97.286m

Funding appropriated to:
  • Vote Social Development and
  • Vote Revenue
The Government has simplified the previous fee regulation policy introducing one Annual Maximum Fee Movement (AMFM) for all courses at all levels.

For 2011, providers can increase fees and compulsory course costs for all Government-funded courses by up to 4% on what was charged in 2010.

This change removes the distortive effects of the previous policy, which meant providers with higher cost courses were unable to make increases in fees to off-set the increased costs of provision.

The cost to government is solely made up of estimated additional borrowing through the Student Loan Scheme.
20 Additional Medical Places

Operating funding
  • 2010/11 $0.449m
  • 2011/12 $1.300m
  • 2012/13 $2.181m
  • 2013/14 $3.083m
Four Year Total $7.013m

Capital funding
  • 2010/11 $0.148m
  • 2011/12 $0.358m
  • 2012/13 $0.564m
  • 2013/14 $0.752m
Four Year Total $1.822m
This initiative adds a further 20 places to the first year undergraduate medical cap. This increases the cap to 445 places from 1 January 2011.

These additional 20 medical places build on the 2010 increase of 60 places, and continues the Government’s manifesto commitment to increase the medical cap by 200 places over five years.

Funding is to be provided from savings realised in Vote Health.

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Savings initiatives summary

Non-departmental savings

InitiativeDescription
Aligning Student Achievement Component Rates for Other Tertiary Education Providers with Private Training Establishments

Savings Rationale

The change will level the playing field between Other Tertiary Education Providers (OTEPs) and comparable PTEs.

Four Year Total Savings – $2.433m
OTEPs have their origins as unique or nationally important organisations which received special funding under s321 of the Education Act 1989. They retained a higher SAC rate when Private Training Establishment (PTE) rates were reduced. Most SAC-funded OTEPs are also registered with NZQA as PTEs, and some compete with PTEs.

Seven of the 14 OTEPS receive SAC funding. SAC rates for four OTEPs are to be progressively reduced to the same level as PTEs. SAC funding levels for three OTEPs will be retained.

This change will occur in tandem with a move to incorporate OTEPs into the wider funding administration framework for either PTEs or community providers (as appropriate to each OTEP).

Implementation of the funding and wider changes will be managed in such a way that each OTEP will gradually transition at a transparent and manageable rate.
Reprioritisation of Tertiary Education Organisation Component

Savings Rationale

Capability funding is not directly linked to outputs or funds lower priority activity. Savings are to be used to support other priorities, including enrolment growth in areas of need.

Four Year Total Savings – $221.934m
The Tertiary Education Organisation Component - Capability Fund appropriation is to be disestablished.

Most funding within this appropriation has already been transferred into the SAC to directly fund EFTS. The following funds are to be disestablished at the end of 2010:
  • Supporting Change
  • Encouraging and Supporting Innovation
  • ITP Business Links Fund
  • Base Grant
Some funding is being retained:
  • The full $15m of Equity Loading
  • $1.0m from the Industry Training Organisation (ITO) Strategic Leadership Fund
  • The full $1.5m from the Priorities for Focus: Wananga Research fund
This remaining funding is to be transferred to the Tertiary Education Grants and Other Funding appropriation from the beginning of 2011.
Two Year Stand-Down for Student Loans for Permanent Residents and Australians

Savings Rationale

The Government wants people coming into the country to show a commitment to New Zealand before being able to access student loans.

The change brings the Student Loan Scheme into line with the benefit system and moves it closer to the way Australia approaches student support for Kiwi students.

Extending eligibility to sponsored family members of permanent residents/citizens who gained residence under refugee policy will make student support consistent with other Government policies.

Four Year Total Savings:
  • operating $79.284m
  • debt impact $181.746m
Appropriations in:
  • Vote Social Development and
  • Vote Revenue
The introduction of this policy will mean:
 
  • permanent residents and Australians will be subject to a two year stand-down before they can access student loans (unless they were granted residence under refugee policy or are a protected person under the Immigration Act 2009).
  • people who are sponsored into New Zealand by a family member who gained residence on account of their refugee status will be exempt from the two year stand-down for both student loans and allowances.
Permanent residents and Australians would need to be both ordinarily resident and have resided in New Zealand for two years. This mirrors current student allowance policy.

The policy starts from 1 January 2011. A student would be grandparented through the qualification they are currently undertaking or a maximum of two years – whichever is earlier.
7 EFTS Student Loan Life-Time Limit

Savings Rationale

The policy is intended to encourage students to take the most direct route through their studies to ensure they have sufficient entitlement to a student loan.

This initiative only creates small savings – if the policy was fully implemented today, it would generate an operating impact saving of $1.9m per year. The value of the proposal is in the signal that it sends – entitlement is not unlimited and students need to make wise study decisions.

Four Year Total Impact:
  • operating: $1.427m (costs)
  • debt impact: $0.408m (savings)
Appropriations in:
  • Vote Education
  • Vote Social Development and
  • Vote Revenue
This policy will put in place a life-time limit on student loans of 7 EFTS units. If a student is approaching the end of their 7 EFTS entitlement, and one more course will take them over their entitlement, they will be able to complete the course.There would be additional entitlements for:
  • doctoral study (up to 3 EFTS)
  • completing other post-graduate study (1 EFTS)
A borrower may receive extra entitlement under each of these exceptions once only. The maximum number of additional EFTS that a borrower can receive is 3 EFTS units.
 
The EFTS count relates to the full study load for the period in which a loan is drawn down. If a student has not borrowed in a particular year, their study would not count against their 7 EFTS entitlement.

The count will begin for study commencing on or after 1 January 2010.
Changes to the Student Loan Scheme Administration Fee

Savings Rationale

This policy will ensure that more of the costs of student loan administration are covered by borrowers over the life of the loan.

Four Year Total Savings:
  • operating: $65.065
  • debt impact: $7.575
Appropriations in:
  • Vote Social Development and
  • Vote Revenue
The $50 administration fee charged by StudyLink has not been increased since the Student Loan Scheme was established in 1992, despite increased administration costs. Inland Revenue does not charge any fees to borrowers for the administration of their loans.

This policy will increase the StudyLink administration fee from $50 to $60. This will take effect for all new loan accounts for 1 January 2011.

A new Inland Revenue annual account fee of $40 will also be introduced, which will apply when study is completed. The first fee will be charged at 31 March 2012 for the 2011/12 tax year.

No borrower will be required to pay both a StudyLink fee and an Inland Revenue fee in the same tax year.
Student Loan Performance Element

Savings Rationale

This policy provides an incentive for people to perform in order to retain eligibility for student loans. When people take out a student loan, but fail to gain a qualification, they incur costs for themselves and for the Government without any real gain.

Four Year Total Savings:
  • operating: $137.836m
  • debt impact: $271.449m
Appropriations in:
  • Vote Education
  • Vote Social Development and
  • Vote Revenue
This policy introduces a performance element to the Student Loan Scheme. Loan eligibility will be removed for those who do not pass at least half of their course load over an extended period (approximately two full-time years of study).

Student performance will be assessed cumulatively. There will be a rolling five year limit on the period over which performance is assessed. This means earlier failure does not continue to adversely affect a student, but that more recent failure does.

The assessment of performance will begin for courses that ceased in 2009. This means that some borrowers may lose eligibility in 2011.

Where students believe they have extenuating personal circumstances that have led them to perform poorly they are able to apply to StudyLink for an exemption. These exemptions will be made at StudyLink’s discretion.

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