Changes in Student Allowances in 2008 Publications
Publication Details
Since 2005 the number of student allowances recipients has risen by 5 percent each year, reaching 65,700 in 2008.
Author(s): Central Forecasting and Modelling Unit, Ministry of Education.
Date Published: July 2009
Summary
Recent changes
From 1 January 2008, the lower parental income testing threshold for students under the age of 25 years with no dependants was increased by 10 percent to $44,334 per annum-the latest in a series of increases that started in 2005. The cut-out points also rose by 10 percent1. From 1 April 2008, an annual inflation adjustment of the personal income abatement threshold was introduced to reflect changes in the cost of living.
In 2008, the number of recipients increased by 3,200 (or 5 percent) and reached 65,7002. The increase was due to more recipients under the age of 25 years who received targeted, parental income-based allowances. The main changes occurred in universities (contributed 65 percent of the increase) and polytechnics (25 percent of the increase).
In 2008, expenditure3 on allowances increased by $11 million (or 3 percent) and reached $397 million. The average annual gross allowance decreased by 2 percent to $6,000. The decrease in the average annual allowance occurred mostly because of the increase in the proportion of relatively less expensive parental income-based allowances.
In 2008, the average age of allowances recipients was 26.5 years.
Since 2005 the number of student allowances recipients has risen by 5 percent each year, reaching 65,700 in 2008. These increases followed a period of falling uptake.
The number of student allowances recipients dropped by 19 percent from its peak of 70,200 in 2001 to 56,800 in 2005. In this four-year period, student allowances expenditure decreased by 13 percent, from $399 million to $346 million. The downward movements in volumes and values mostly resulted from two factors: the parental income testing thresholds being fixed (for students under the age of 25 years with no dependants) between 1992 and 2005 and a decrease in unemployment. The latter improved the availability of part-time jobs for young people and it also had the effect of boosting family incomes, resulting in fewer families with incomes under the fixed parental income threshold.
Key facts in 2008:
- There were 65,700 student allowances recipients; up by 5 percent on 2007.
- 54 percent of allowances recipients were female.
- 60 percent of allowances recipients were under the age of 25 years.
- 70 percent of allowances recipients received an accommodation benefit.
- 55 percent of student allowances recipients were studying at university and 25 percent were studying at institutes of technology and polytechnics.
- The average age of allowances recipients ranged from 24 years at universities to 41 years at wānanga; the overall average age was 26.5 years.
- There were 37,400 targeted parental income based allowances; up by 10 percent on 2007.
- 14 percent of allowances recipients were living in relationships (married or de facto couples) and 8 percent had one or more children.
- 81 percent of student allowances recipients also borrowed through the student loan scheme.
- 35 percent of student allowances recipients also received a living costs loan entitlement.
- Receiving both student allowances and student loans is more prevalent amongst those studying for higher qualifications.
- Expenditure on allowances was $397 million; up by $11 million on 2007.
- The average annual allowance ranged from $2,500 for students with earning spouses to $10,800 for students with dependent partners. Overall, the average annual allowance was $6,000.
Figure 1: Gross expenditure on student allowances
Recipients and Expenditure | 2004 | 2005 | 2006 | 2007 | 2008 |
---|---|---|---|---|---|
Number of recipients | 60,800 | 56,800 | 59,400 | 62,500 | 65,700 |
Change from previous year | -5% | -7% | 5% | 5% | 5% |
Expenditure, $M | 371 | 346 | 374 | 386 | 397 |
Change from previous year | -3% | -7% | 8% | 3% | 3% |
The changes in student allowances observed in 2006 to 2008 resulted from a number of policy initiatives designed to widen access to allowances for targeted groups of students.
Students under the age of 25 years with no dependants whose parents have low or middle incomes is such a target group.
Eligibility for allowances for such students depends on their parents' incomes. Student allowances are abated if the combined parental income is above a lower threshold, but below an upper threshold or cut-out point.
In 2006, the number of recipients increased by 2,600 (or 5 percent) and reached about 59,400. Allowances expenditure increased by $28 million (or 8 percent) and reached $374 million. The average annual gross allowance increased by 3 percent to $6,300. This increase in the average annual allowance4 was mostly due to the increase in the personal income threshold introduced in January 20065.
From 1 January 2007, the parental income testing threshold for students under the age of 25 years with no dependants was increased by 10 percent. Since 1 April 2005, these parental income limits have been adjusted annually to reflect changes in the cost of living. From 1 January 2007 the entitlement to student allowances and loans was aligned to tuition subsidy funding – meaning that if a qualification doesn't qualify for funding, then students studying for that qualification are no longer eligible for allowances or loans.
In 2007, the number of recipients increased by 3,050 (or 5 percent) and reached about 62,500. Allowances expenditure increased by $12 million (or 3 percent) and reached $386 million. The average annual gross allowance decreased by 2 percent to $6,200. This fall in the average annual allowance was mostly due to the increase in the proportion of relatively less expensive parental income based allowances.
The proportion of targeted parental income-based allowances was around 40 percent in 2004. As a result of a 20 percent increase in the parental income threshold from 1 January 2005 this proportion increased to 49 percent in 2005. The proportion of targeted allowances increased again to 51 percent in 2006 and 54 percent in 2007.
Footnotes
- To $69,081 for students living at home and $75,269 for students living away from home.
- The numbers of allowance recipients are rounded to 100 and the average annual allowances are rounded to $100.
- Student allowances expenditure consists of the amount paid to students in a particular year and is net of any repayments. It differs from the official general ledger figure calculated on an accrued basis by less than 0.4 percent a year due to not accounting for payments to the previous years' students.
- The average annual allowance in this report includes the average accommodation benefit.
- From 1 January 2006 the personal income threshold increased from $135.13 per week gross to $180 per week gross and a cliff-face exclusion for personal income over the threshold was replaced with a 100 percent or 'dollar for dollar' abatement regime.
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