The student living costs loan is no match for sky-high rents. It needs to be raised, now

The living costs loan is designed to keep students housed and fed, but in our biggest cities it rarely even covers rent. That’s where a new lobby group for legislative reform to improve students’ welfare comes in, says Jack Close, the group’s founder.

Living costs are a student loan administered by StudyLink to cover “day to day expenses”. At present, they are $178.81 a week, adjusted annually with the rate of change in the Consumer Price Index. They are not a hand out, they are an adult contractual decision students make to forego future benefit in order to survive.

But the government doesn’t seem to get that.

The same day Salient Magazine published my opinion on living costs, I received an official information response from the Ministry of Education on the topic. The response provided the advice on living cost policy options received by then-Minister Pete Hodgson from his analysts in 2007. The options were:

A: Increase living costs to $165 a week, adjusted yearly to match inflation through the Consumer Price Index

B: Link living costs to the highest rate of student allowance for a ‘over 25 year old living away from home’ – which at the time would have been $183.61 a week

A section from the report ‘Options for increasing the living cost component of the Student Loan Scheme’ delivered to the Minister of Education in November 2007

In an act of ‘good advice, poor decision’, Minister of Education Pete Hodgson went for Option A. In favour of administrative simplicity and cost cutting, the government of the day opted for the policy which “lacks a visible rationale”. Surely though, with a change of power and a decade to think about it, the government would come to its senses and pull through with legislative reform for students’ welfare? No such chance.

While the Consumer Price Index that the current living costs policy is pegged to has increased a meagre 4.3 percent in the last five years, rent prices have increased by over 31 percent. So not only were living costs set at an arbitrary, ‘irrational’ rate back in 2007, but the way in which they are adjusting is inherently flawed.

The Consumer Price Index calculates changes in a ‘basket of goods’ over time to quantify inflation. That basket includes pretty much everything you can think of buying – including food, household items, and services. Given global inflation trends, it is unsurprising that the Consumer Price Index has had a very incremental and insignificant increase over the last five years. However, as we all know – because of the government’s regulatory and economic mismanagement – increases in rent prices have been far from incremental and insignificant. For students in our biggest cities, living cost payments of $178.81 are evaporated by rent before one can even consider other costs of living, like food or utilities.

Meanwhile New Zealand has the highest rate of suicide among young people in the OECD. Worse still, as a young person, you are more likely to die of suicide than any other way. By flouting this issue, the government could not be any more callous in its ignorance toward young people.

The Aotearoa Students’ Alliance logo

This is where the Aotearoa Students’ Alliance comes in. Founded only a week ago in the throes of ever-increasing overdraft balances and sleep for dinner, it has a simple purpose: to get in the faces of politicians to demand political accountability for students’ welfare. The Aotearoa Students’ Alliance begins with two policy objectives:

  1. To reform living costs, by pegging them to the highest student allowance, and adjusting them according to rental inflation – not the Consumer Price Index.
  2. A royal commission of inquiry into the state of mental health in New Zealand.

The Aotearoa Students’ Alliance is not, does not claim to be, and will never be a students’ union. It is explicitly and unashamedly a political pressure group with the sole aim of lobbying government for legislative reform to improve students’ welfare. It has been set up to send a clear message to the government on behalf of tens of thousands of New Zealanders in extreme financial hardship and struggling with mental health.

Student or not, come and show your face on our brand new Facebook page, or follow us on Twitter. While we are hungry, we promise we won’t bite.

More by Jack Close: ‘The idea of living costs is that you’re supposed to live off it.’ An argument for letting students borrow more

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