Student Costs Soar: NZ Uni Life More Expensive Than Ever

The rising cost of being a student in New Zealand is creating significant financial strain, forcing many to increase borrowing, work longer hours, or rely more heavily on family support. Recent reports highlight a widening gap between student support and the actual cost of living, particularly concerning rent, and groceries.

Huda Jamali, an international student at Massey University in Palmerston North studying animal science, noted that while living costs are lower than in larger cities, they are still surprisingly high. She currently pays $270 per week for a room in a shared house, a more affordable option than university halls, which she found to be overpriced at around $230 per week for a non-catered room. “I don’t recommend living in halls. I don’t feel it’s worth the price for the halls I’ve seen here in Palmerston North,” she said.

However, even shared housing doesn’t shield students from escalating expenses. Jamali emphasized the particularly sharp increase in grocery prices. “Our groceries are incredibly expensive as well. Fresh produce is crazy. It’s very expensive and it’s so hard to eat healthy just because of the expensive fresh produce,” she explained.

The financial pressures aren’t isolated to Palmerston North. Darcy Nelson, a student at the University of Otago in Dunedin, described rent as “ridiculously expensive,” especially considering the often-poor condition of rental properties. Her rent increased from $205 to $220 per week during her studies. “It’s really crazy for what you’re paying for – it’s a room in a very, very cold mouldy house,” she said.

Nelson’s attempts to offset these costs with part-time work were unsuccessful. Unable to secure employment, she was forced to increase her student loan. She also observed the struggles of her peers, citing a friend who subsisted largely on pasta due to financial constraints. “She got the full loan out and she was skimping by truly eating pasta just all the time. She couldn’t afford anything, it was crazy,” Nelson recounted.

The situation is compounded by insufficient student allowances. According to economist Shamubeel Eaqub, the financial equation for students has dramatically worsened since 2005. While student support has risen 86% since then, essential costs have increased by a much larger margin – 220%. Currently, rent averages $193 per week and food costs $96, creating an $8 weekly shortfall even before accounting for textbooks, transportation, or leisure activities. Eaqub estimates that students now require over $300 per week simply to cover basic living expenses.

Data from the Ministry of Social Development shows an increase in the number of students receiving financial assistance. In the first quarter of last year, just under 35,000 students received some form of support, a 5.2% increase year-over-year. However, the average payment received was $1882 for the quarter, a 3% decrease.

The maximum weekly allowance for students under 24 living with their parents is $277.72, while those living away from home receive $323.33. Eligibility and the amount received are dependent on both the student’s income (if applicable) and their parents’ income (for those under 24). Students who do not qualify for an allowance can borrow additional funds for living costs, but these loans must be repaid.

Eaqub points to a significant shift in the affordability of student living. In 2015, rents in Dunedin and Palmerston North were approximately 60% of those in Auckland. Now, they represent over 80% of Auckland’s rental costs. University tuition fees have increased by 113% and polytechnic fees by 60% over the same period. The median student loan balance has risen from $10,000 in 2005 to $24,000 in 2023.

Eaqub also questions the long-term financial benefits of higher education, noting that income premiums for graduates have begun to flatten and become more uncertain in the post-pandemic economy. While a qualification still provides an advantage, the specific field of study and the sector in which a graduate enters the workforce are now more critical determinants of success.

Eaqub suggests several potential solutions, including indexing student support to the actual cost of living, redirecting KiwiSaver subsidies to help students finance their education, and addressing the broader housing crisis. He also proposes a reimagining of the student loan scheme, potentially including repayment smoothing mechanisms, income-contingent repayment options, or even limited debt forgiveness for graduates entering professions with demonstrable public benefit, such as teaching, nursing, or social work, contingent upon verified service.

“We want our young people to have access to affordable and high quality education. They are the future of our country,” Eaqub concluded.