David Farrar: Hipkins biggest failure?

The Herald reports:

The number of disadvantaged students using the fees-free scheme for university in 2024 slumped to the lowest figure in the scheme’s short history. …

But only 1.3% of the fees-free students at university in 2024 came from EQI 7 schools. In actual numbers, this translated to 230 fees-free university students in 2024 from EQI 7 schools, while there were 775 students from EQI 6 schools. Both of these are the lowest numbers on record for the scheme’s six-year history.

So 230 of the most disadvantaged students were helped at a cost of over $100 million.

“It’s a tremendous way to spend a lot of money to no effect,” tertiary education consultant Roger Smyth, who used to work at the ministry, told the Herald.

“They seriously believed it would make a big difference to participation.

“But the drivers of tertiary education participation occur in early childhood, the expectations built up in children’s minds through their schooling, through parenting, and so on, which keep getting reinforced year by year through the schooling system.”

Access to money was only a “small component” of what drives participation, Smyth said, but fees-free made no difference to students in terms of cash in the hand.

“All the scheme paid was your fees, but you could borrow anyway, so nobody was better off, in cash terms.

“It made a difference in debt terms, which meant that six, seven, eight years down the track, you paid your loan off a year or so earlier – at the very point when you didn’t need it so much.”

This is key. This hugely expensive scheme doesn’t even affects students when they are relatively cash poor and studying because they get loans. All it does is mean that when they are say in their 30s and on high incomes, they stop repaying their loans a bit earlier.

The ministry recommended axing the policy altogether; it costs hundreds of millions of dollars a year for essentially no beneficial change, though applying it to the final year of study will at least cost less than the first-year scheme.

Changing it from first to final year fees free is in the coalition agreement with NZ First so can’t be changed this year. But I hope National goes into the election pledging to discontinue it if reelected.

That money would be far far far better spent on early childhood education than subsidising wealthy graduates.

David Farrar runs Curia Market Research, a specialist opinion polling and research agency, and the popular Kiwiblog where this article was sourced. He previously worked in the Parliament for eight years, serving two National Party Prime Ministers and three Opposition Leaders