Tertiary education initiatives

Tertiary education initiatives announced by the Government in Budget 2013

InitiativeDescription
Increase Funding Rates for Engineering

Operating funding
  • 2013/14 $1.270m
  • 2014/15 $2.590m
  • 2015/16 $2.690m
  • 2016/17 $2.790m
Four Year Total $9.340m
Increases tuition subsidy funding rates for priority engineering courses by 2 percent to continue to bring tuition subsidy relativities for engineering closer in line with international practice and maintain the quality of provision.
Increase Funding Rates for Science

Operating funding
  • 2013/14 $2.525m
  • 2014/15 $5.075m
  • 2015/16 $5.125m
  • 2016/17 $5.175m
Four Year Total $17.900m
Increases funding rates for science tertiary education by 2 percent to maintain the quality of provision and to continue to bring tuition subsidy relativities for science closer in line with international practice.
Equalising Private Training
Establishment Funding Rates

Operating funding
  • 2013/14 $4.100m
  • 2014/15 $8.200m
  • 2015/16 $8.200m
  • 2016/17 $8.200m
Four Year Total $28.700m
Advances the Government‘s 2011 election manifesto commitment to eliminate differences in funding policy treatment between public and private providers.
Continue 99-105% Tolerance Bands Beyond 2013

Operating funding
  • 2013/14 $2.015m
  • 2014/15 $3.137m
  • 2015/16 $2.894m
  • 2016/17 $2.672m
Four Year Total $10.718m
Extends 99-105 percent over-delivery tolerance bands beyond 2013 to provide more flexibility in the tertiary system. This will contribute to the Better Public Services target of 55 percent of 25-34 year olds holding a level 4 qualification or above in 2017.
Additional Flexibility for Highly Performing Private Training Establishments

Operating funding
  • 2013/14 $3.609m
  • 2014/15 $6.343m
  • 2015/16 $5.930m
  • 2016/17 $5.607m
Four Year Total $21.489m
Allows highly performing private training establishments to deliver an additional 1000 EFTS that do not attract tuition subsidies in their approved investment plans. This will support achievement o the target of 55% of 25-34 year olds achieving a qualification at level 4 or above by 2017.
Expanding Māori and Pasifika Trades Training Operating funding
  • 2013/14 $4.066m
  • 2014/15 $8.573m
  • 2015/16 $11.199m
  • 2016/17 $11.199m
Four Year Total $35.037m

A further $8 million from Vote Employment has been provided for project management and co-ordination costs.
Expands the number of dedicated Māori and Pasifika trades training places available from 600 to 3000 by 2015 and provides additional support for learners. This will improve the achievement levels and employment outcomes of Māori and Pasifika learners in vocational education, and contribute to current and future needs for skilled tradespeople.
Confirmation of New Industry Training Rates

The new funding rates are fiscally neutral. Cabinet approved the final new funding rates through Budget 2013.
Introduces new funding rates for trainees and New Zealand Apprenticeships to support the revitalised industry training system. The new funding rates are $3,200 per standard training measure (GST exclusive) for trainees and $5,200 per standard training measure (GST exclusive) for New Zealand Apprenticeships.
Centres of Research Excellence – Funding Increase and New Selection Round

Contingency funding in Budget 2013
2014/15 $3.169m
2015/16 $3.169m
2016/17 $3.169m

Four Year Total $9.507m

Operating funding
2013/14 $0.500m
Sets aside contingency funding for CoREs of $3.169 million per annum to fund increased activity and/or reflect increasing costs and complexity of research activity. Further specification of the new funding may be made following the current policy review of the CoRE fund.

Provides $0.500 million in 2013/14 to allow for the operating costs for a new selection round for CoREs.
20 Additional Medical Student Places

Operating funding
  • 2013/14 $0.362m
  • 2014/15 $1.077m
  • 2015/16 $1.845m
  • 2016/17 $2.668m
Four Year Total $5.952m
Continues the Government’s manifesto commitment to increase the undergraduate medical cap by 200 places over five years by adding a further 20 places to the cap from 1 January 2014.

 

The additional funding builds on increases of 120 medical places between 2010 and 2012 and raises the medical cap to 505 places.

Increasing the Tertiary Equity Funding Pool

Operating funding
  • 2013/14 $0.640m
  • 2014/15 $1.478m
  • 2015/16 $1.881m
  • 2016/17 $2.297m
Four Year Total $6.296m
Provides a 4 percent increase to the Equity Funding pool.

Equity Funding is a fixed funding pool. Higher than forecast participation by Māori and Pasifika students means that current funding levels are not sufficient to maintain current funding rates per student.

This will maintain current rates per student and ensure that tertiary providers continue to be incentivised to enrol and progress Māori and Pasifika students and students with special educational needs.
International Education Initiatives

Operating funding
  • 2013/14 $10.000m
  • 2014/15 $10.000m
  • 2015/16 $10.000m
  • 2016/17 $10.000m
Four Year Total $40.000m
Provides an additional $10 million per year for Education New Zealand to:
  • grow awareness of New Zealand as an education destination internationally
  • promote New Zealand’s education services and products abroad
  • support industry-led opportunities for international education growth.
This will support achievement of the Business Growth Agenda’s export markets goal of increasing the ratio of exports to gross domestic product to 40 percent by 2025.
Develop Youth Option in the Literacy and Numeracy for Adults Assessment Tool

Operating funding
  • 2013/14 $0.093m
  • 2014/15 $0.165m
  • 2015/16 $0.165m
  • 2016/17 $0.165m
Four Year Total $0.588m
Creates a new option for young people within the Literacy and Numeracy for Adults Assessment Tool, in order to better engage younger students and support their participation in the Youth Guarantee.
Consolidating Funding for Literacy and Numeracy Provision

Operating funding
  • 2013/14 $5.000m
  • 2014/15 $5.000m
  • 2015/16 $5.000m
  • 2016/17 $5.000m
Four Year Total $20.000m
Provides additional funding of $5.0 million per annum in the newly established Literacy and Numeracy Provision programme to purchase specialist literacy and numeracy training for individuals. This funding is contained in the new Community Education appropriation.
Ngārimu VC and 28th (Māori) Battalion Memorial Scholarship

Fund 2013/14 $0.250m
A one off increase to the Ngārimu VC and 28th (Māori) Battalion Memorial Scholarship Fund to support Māori excellence in education. This funding recognises the 70th anniversary of the Victoria Cross awarded to Lieutenant Te Moana-nui-a-Kiwa Ngārimu.
Removal of Cost Recovery Funding for Tertiary Scholarships in Science and Maths and School Achievers Awards

Operating savings
  • 2013/14 $0.750m
  • 2014/15 $0.750m
  • 2015/16 $0.750m
  • 2016/17 $0.750m
Four Year Total $3.000m
Removes cost recovery funding for tertiary scholarships (science and maths) and school achievers awards, as the number of students who are entitled to these awards has been declining since 2005/6 and the New Zealand Qualifications Authority (NZQA) has received no residual claims for these awards in the last four years.

Tertiary Education initiatives and savings – student support section

InitiativeDescription
Student Support
Extending the student loan and allowance stand-down period for permanent residents and Australian citizens.

Rationale
Non-New Zealand citizens are more likely to leave New Zealand and not return than New Zealand citizens.

The stand-down period will help identify those permanent residents who are likely to stay in New Zealand once they finish their study and contribute to our economy and society.

Savings
Four Year Total Savings:
  • $18.689m (operating)
  • $20.229m (capital)
Funding appropriated to or savings from:
  • Vote Social Development; and
  • Vote Revenue
From 1 January 2014 to be eligible for student support, students who are not NZ citizens will need to be ordinarily resident in New Zealand, and have resided in New Zealand for 3 years, and have held the right to reside in New Zealand indefinitely for 3 years.

The policy will exempt those who hold refugee status, protected persons status, or persons sponsored by a family member who held refugee status or protected person status when they entered New Zealand.

This change is expected to remove about 1,560 student loan borrowers in calendar year 2017 and on average 930 student allowance recipients over the three calendar years 2015, 2016 and 2017.

Transition:
Those who would have been eligible for student support under the previous 2 year stand-down rule in 2014 will be able to access student support from the date they would have been eligible.
Putting in place an ongoing information-sharing agreement between Inland Revenue and Internal Affairs.

Rationale
The main barrier to collecting student loan and child support debt is that too many borrowers and liable parents have lost contact with IR.

Appropriations
None – operating and capital costs are being absorbed by Inland Revenue
A new agreement will allow the Department of Internal Affairs to share the contact details from adult passport applications and renewals with Inland Revenue. These details will be matched against Inland Revenue’s database of overseas-based borrowers (student loans) and liable parents (child support).

Defaulters will be contacted by Inland Revenue to confirm their details, discuss any arrears and organise payments. Contact details will not be updated in Inland Revenue’s system without these being confirmed by the individual. This agreement will not impact on a person’s ability to obtain a passport or to travel.

Inland Revenue expects to identify contact details for up to 12,000 overseas-based borrowers and 2,000 liable parents annually.
Adjusting the overseas-based borrower repayment regime.

Rationale
Changes to the thresholds and repayment obligations of overseas-based borrowers will ensure that a larger proportion of borrowers have obligations that at least cover the interest on their student loans. It will also bring their obligations more inline with New Zealand-based borrowers’ obligations which increase as their income increases. Previously, overseas-based borrowers’ repayment obligations decreased as their loan balances decreased even though it is likely their income was increasing. This change is more inline with how commercial loans operate.

Operating funding
Four Year Total $3.241m

Funding appropriated from:
  • Vote Revenue
There are two changes being made to the overseas-based borrowers’ repayment regime. These are introducing fixed repayment obligations and adding two additional steps to the current overseas-based repayment regime.

Fixing the repayment obligations will impact on overseas-based borrowers with loan balances in excess of $15,000 and the new thresholds will impact on borrowers with loan balances of over $45,000. This change will affect approximately 63,000 current borrowers living overseas with loan balances over $15,000 and 18,500 current borrowers with loan balances over $45,000, as well as future overseas-based borrowers.

These changes will be made from 1 April 2014 for 2014/15 and beyond.

New repayment obligations:
Loan balanceAmount due per year
<= $1,000 The whole balance
>$1,000 and <= $15,000 $1,000
>$15,000 and <= $30,000 $2,000
>$30,000  and <= $45,000 $3,000
>$45,000  and <= $60,000 $4,000
>$60,000 $5,000
The impact on compliant borrowers at $20k, $40K, $50K and $70K respectively are:
Loan balanceRepayment time
  Current regime New regime
$20,000 35 yrs 15 yrs
$40,000 57 yrs 24 yrs
$50,000 82 yrs 21 yrs
$70,000 Never* 27 yrs
Loan balanceInterest cost to borrower
  Current regime New regime
$20,000 $19,940 $8,425
$40,000 $57,751 $31,089
$50,000 $117,431 $33,199
$70,000 Indefinite* $62,092
*interest exceeds repayments
Introducing the ability to arrest non-compliant borrowers who are about to leave the country.

Rationale
The number of overseas-based borrowers going into default continues to increase with the default levels having climbed to $427 million by 31 March 2013.

This change will deter borrowers who can afford to pay their loan but refuse to do so from leaving the country until they settle their student loan.

Similar provisions exist under the Child Support Act.

Operating funding
Four Year Total $0.600m

Funding appropriated from:
  • Vote Revenue
Making it a criminal offence to knowingly default on an overseas-based borrower repayment obligation will allow an arrest warrant to be requested to prevent the most non-compliant borrowers from leaving the country.

This is a precision tool that will only be applied to the worst cases of non-compliance. The number of arrest warrant requests is anticipated to be low, but it is anticipated that the threat of arrest will prove to be a powerful deterrent against non-compliance.
Removing student allowances eligibility for those aged 65 years and over.

Rationale

The purpose of this initiative is to target student allowances more tightly on the basis of returns to study, initial years of study and priority learners. The return on investment to the Crown in a person’s education is much less if the person is not active in the workforce once completing.

Savings
Four Year Total Savings:
  • $7.968m (operating)
  • $1.747m (capital)
Funding appropriated to or savings from:
  • Vote Social Development; and
  • Vote Revenue
This policy will remove eligibility for student allowances for those aged 65 and over, for applications for study starting on or after 1 January 2014.

This policy would be linked to the eligibility age for New Zealand Superannuation. As there is already a restriction on receiving the allowance and superannuation at the same time, those qualifying for superannuation will in effect be no worse off.

On average, it is estimated this policy will affect 240 people per year.

Transition:
Students who received a student allowance in 2013 may continue to receive a student allowance up until 31 December 2014 or until they reach the (previous) 200 week limit, whichever comes first.
Reducing student allowance limit for those aged 40 and over to a maximum of 120 weeks.

Rationale
The purpose of this initiative is to improve the targeting of student allowances to further refocus student support on initial years of study and younger learners.

Savings
Four Year Total Savings:
  • $9.269m (operating)
  • ($5.789m) (capital)
Funding appropriated to or savings from:
  • Vote Social Development; and
  • Vote Revenue
This policy will reduce the student allowance 200 week limit for people aged 40 and over to a maximum of 120 weeks, for applications for study starting on or after 1 January 2014.

120 weeks (approximately 3 years) of support is enough to gain an undergraduate degree, or allow them to retrain or up-skill.

Over the next four years we expect on average 685 people aged 40 and over will not receive a student allowance because of this change.

Transition:
Those studying in 2013 with a student allowance will be able to continue receiving an allowance until 31 December 2014 or until their previous 200 week limit is used, whichever comes sooner.
Changing the way the cost of lending is calculated in the Student Loan Scheme.

Rationale
It is important to make the calculation of the cost of lending in the loan scheme as accurate as we can to avoid misallocation of resources.

Savings
Four Year Total Savings:
  • $60.100m (operating)
The Government has changed the method of calculating the cost of lending in the Student Loan Scheme to align it with accounting standards.

This change means we have a more accurate understanding of the cost of lending. There will be no impact on borrowers
Adjusting access to student loan scheme for fees-free study.

Rationale
The administration changes stem from a Cabinet decision in June 2012 to restrict loan eligibility for levels 1 and 2 study. The restrictions aim to reduce or avoid the costs to individuals of student loan borrowing for acquiring essential foundation skills.

This change will discourage students aged 16 and 17 from enrolling in fees-free levels 1 and 2 provision instead of the fees-free Youth Guarantee just to access the Student Loan Scheme.

Operating funding
Four Year Total $0.600m

Funding appropriated from:
  • Vote Social Development
This initiative funds StudyLink to make changes to student loan administration for people studying at levels 1 and 2 in tertiary education to:
  • ensure that students in fees-free levels 1 and 2 qualifications are not borrowing for fees from the Student Loan Scheme (from 1 January 2013).
  • restrict students in fees-free levels 1 and 2 qualifications who are under 18 years of age from borrowing from any part of the Student Loan Scheme (from 1 January 2014).
Inability to borrow for fees will have no direct impact on students as the Government is fully funding these programmes. It will have an impact on 16-17 year olds who will not be able to borrow for living or course-related costs.

Need more information?

More information on Budget 2013 changes to tertiary education and student support is available on the following websites:

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