In an article published on 25th November 2018 [1], NZ Herald columnist Heather du Plessis-Allan (HDP) opens with:

Labour’s year of free university study is an expensive flop.

and

The policy should never have been introduced.

She doesn’t immediately provide any reasoning behind either statement.

In the next paragraph she disparages the policy as a harebrained idea. Again the author provides no arguments about why it is harebrained in her opinion. Nor why a policy that appears rather unremarkable alongside many other advanced economies (e.g. Austria, Belgium, Denmark, Finland, France, Germany, Netherlands, Norway, Sweden, Spain) should be harebrained when applied in the New Zealand context. A 2016 OECD study [2] reports that average annual tuition fees in New Zealand were higher than all but six OECD nations. So actually in a global context New Zealand was - up until the new policy - in the minority of advanced economies by having relatively high levels of tuition fees. Most OECD countries have lower or no tuition fees. Given that 16 OECD nations in fact have no fees (or only administrative fees) the policy is hardly harebrained.

But none of this context or detail bothers HDP. In the fourth paragraph she makes another unsubstantiated claim based on no evidence or source:

But Labour never thought they’d actually have to follow through and deliver on the excessive election bribe.

She follows with

But you can see how a normally rational person might have thought it was a good idea to roll out this stupid policy.

Again disparaging words. By this point we have read 200 words of mostly meaningless and partisan trash talk and there is yet to be evidence of a single intellectually rigorous idea or argument to motivate or support the drivel. I claim this article is partisan because the term “Labour” (referring to the main political party comprising our current coalition government) appears a whopping 10 times in little more than 600 words! HDP is trying very hard to make sure the reader doesn’t leave without connecting her disparaging words with a particular political party.

The fifth paragraph seems to herald her main argument:

But now, here we are, more than a year in, things have settled down, and the truth is blinding. This policy is a flop every which way you look at it. All the figures out this week show we’re wasting our money.

The flamboyance of “This policy is a flop every which way you look at it” suggests we are about to get a critical, detailed and well-researched analysis. But no, it turns out she just cherry-picked from a colleague’s article [3] and added her own myopic spin.

Here is her first statement of evidence which links to above article:

The first year has cost us $236 million.

Obviously governments spend money. That is what they do. They collect revenue from taxes and spend money on things which will benefit society and minimise social division and inequalities. That is why we have a budget. HDP is just reporting a big number without any context and encouraging the reader to think: “Wow! look how much this costs.” To contextualize the government has a total of $15.25B allocated to primary and tertiary education alone in the 2018 budget, so $236 million represents 1.5% of this total spend. Regardless, how can the mere quantum of expenditure tell you anything about the worthiness of a policy? Surely any analysis of this expenditure must come with a consideration of the expected outcomes within some time horizon. But that sort of detail doesn’t seem to bother HDP.

Her second statement of evidence:

And it’s money we didn’t need to spend. Because these kids were going to go to uni anyway.

The first sentence disregards the fact that tertiary education was already substantially subsidised in New Zealand before the no-fee policy. HDP doesn’t bother herself with considering what the correct level of subsidy is, if not 100%. She seems to be suggesting that the level of subsidy we already had was the right level, but without any argument as to why. The second sentence is completely unsubstantiated. She provides no evidence at all for it, and in fact, the article she cites suggests that the no-fees policy probably helped to halt what had become an alarming decline in tertiary education participation. Together they amount to a bizarre statement. Would she also argue that ‘we’ taxpayers don’t need to spend money on primary schools, or healthcare or roading, or police? Since those families/individuals who need such services could independently spend their hard-earned money on private schools and private hospitals and private roads and private police departments? The whole point of public services in an advanced society is that some things are worth providing to all because they are too valuable to leave to individual chance. Education is the most important investment we can make in our next generation, and it has a very large impact on their prosperity and therefore our prosperity. Not to mention the value to our intellectual development as individuals and collectively. Whether some or all students would go to university anyway by taking on debt at an early age is beside the point. Do we want the next generation to be immediately encumbered and worried about debt before they have even started to earn and contribute? Besides the envy of those that didn’t get a free tertiary education, what is a good argument for encumbering them in that way?

She goes on, again reminding us that her harsh words are directed at a particular political party:

Labour thought people would be breaking down the gate to get into uni once it was free. They said 80,000 students would be eligible. But 80,000 didn’t turn up. Only 42,000 did.

Fact check: 80,000 was not a target or an estimate of the number of students that would take up the offer, it was only an estimate of the number that would be eligible. In the first year the government actually budgeted for a modest “3 percent increase in equivalent full-time students in 2018, equating to about 2000 extra students.” [4]. I am not sure if HDP is being intentionally misleading or sloppy. But this is not good reporting.

She goes on:

And that’s a lower enrolment rate than last year when kids were paying.

This is definitely both misleading and cherry-picking. HDP neglects to provide appropriate context again. Despite the fact that such context was provided in the article she is citing. The Ministry of Education documents that participation rates in tertiary education have been declining for the last decade, and in Bachelor’s degrees for the last five years [5]. This is concerning considering the link between tertiary education and national prosperity, and arguably one of the indicators that would motivate such a no-fee policy. One year is not going to turn around a decade-long trend, especially if the relevant policies are perceived as partisan, and in danger of being reversed if government changed. It is clear that the government was aware that this policy would not completely reverse that trend in its first year.

Despite all this relevant context HDP plows on with a “fact” of her own:

The fact is tertiary education in New Zealand is actually extremely affordable. On average, it only takes six years to pay off a student loan. That’s not anything like a financial burden. Not when you compare it to a 30-year mortgage.

Fact check fail #1: Firstly – prior to the new policy - New Zealand was among those OECD nations that was most expensive in terms of fees [2]. Only six OECD countries were more expensive.

Fact check fail #2: The average time is not six years. The Ministry of Education Annual Student Loan Report 2018 [6] says the forecast median repayment time for all borrowers who left study in 2016 was 8.2 years and that 25% of students will take >14.5 years to pay off their student loans! Even considering only students that stay in New Zealand, the median is 6.8 years (which anybody knows you round up to 7, not down to 6).

Beyond the shoddy reporting (6 is not 8.2 and average is not median) the obvious point to make is that she is (mis)reporting how long the students that have decided to participate in tertiary education will take to pay off their loans. What about those that decided not to enrol in University in previous years precisely because of how long they foresaw having been in debt as a result? As an October 2018 OECD report [7] says:

Tuition fees and other costs faced by students may create financial barriers to entering tertiary education, especially for students from lower socio-economic backgrounds. Reducing these costs may promote more equal access to tertiary education. In 12 out of the 38 countries and economies surveyed, students do not have to pay any tuition fees for first-degree tertiary programmes, and in 4 countries students are only required to pay administrative fees.

So saying a student loan is “extremely affordable” also reveals a basic disregard for the real financial challenges facing the next generation, and a certain lack of financial understanding. Anybody who thinks a 4-15 year debt (the interquartile range from the Minstry’s annual report) is inconsequential to a young person’s financial freedom needs to go back to school. Yes, student loans may be currently interest-free with conditions, but that may change in the future, and the financial obligation to repay exists regardless. Contrast the situation of finishing university debt-free, versus finishing with a debt that will take a substantial number of students >10 years to pay off. This implies a financial delay of 10 years to, for example, begin saving for a house deposit. So there is a huge difference between these options which can have life-changing consequences. Who, when faced with that decision would think it is “not anything like a financial burden”? For many people this will be the difference between being in your first home in your 30’s versus your 40’s, or having the house paid off by retirement age, or not.

Given that this generation of students is the first in a long time to be materially worse off than their parents - with substantially less spending power to buy homes - it is pretty outrageous to suggest that they should pay more for university as well.

You see, actual data from the Ministry of Education shows that tertiary education affordability in New Zealand has significantly declined [8] and the Productivity Commission estimated last year that the real cost of university tuition fees has increased by 24% since 2000 [9]. That means that students now are paying substantially more, corrected for inflation, than I was in the mid 1990’s, or HDP was a decade later. Why is that fair and why is that progress? HDP offers no answers to these salient questions.

Perhaps the problem HDP has is envy. She presumably had to pay fees for her Bachelors degree in Politics at the University of Auckland. It was not that long ago, and like so many who endured but overcame, there can be a response something like “since I did it, why can’t everybody else?” It is a sentiment that is most common among the conservatively-minded that are reflexively suspicious of social progress. Such people tend to put too much weight on their own historical experiences, and too little on the experiences of others that don’t mesh with their own.

More importantly, HDP fails to at any point address why such a no-fee policy would be considered in the first place. Her only comments are couched firmly in cynical terms of presumed political calculations of “youthquakes” and the buying of votes in the last general election. As if elections aren’t also a contest of ideas. You see there are clear reasons for a heavily- or fully-subsidised tertiary education policy. Intellectually rigorous international research has established for decades that the kind of education that the author herself benefited from is valuable for both the individual and for society as a whole. The policy is designed to incentivize tertiary education precisely because a highly educated populace produces economic and social dividends. A 2014 World Bank policy research working paper [10] on the returns from education opens:

Education is critical for economic growth and poverty reduction.

That study summarized worldwide data to show that tertiary education in particular provided larger returns per year of schooling than either primary or secondary schooling and did so more for women than for men. We accept the value of primary and secondary schooling and expect everybody to be educated to at least the end of high school, yet empirical data suggests that we would maximise the individual and societal returns of education by extending this expectation to tertiary education for everybody. So if we aspire to being a prosperous and advanced nation then we should strongly encourage our next generation to be very highly educated, so that together we can develop a rich (and thoughtful, insightful and intellectually rigorous) society. That is what the free University policy is all about. A point that HDP appears to miss entirely.

References

Heather du Plessis-Allan (25th November 2018) “Free university study is an expensive flop”, New Zealand Herald, https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12164973
OECD (2016), “How much do tertiary students pay and what public support do they receive?”, Education Indicators in Focus, No. 41, OECD Publishing, Paris, https://doi.org/10.1787/5jlz9zk830hf-en
Derek Cheng (20th November 2018) “41,700 sign up for fees-free study, but total numbers are falling”, New Zealand Herald, https://www.nzherald.co.nz/education/news/article.cfm?c_id=35&objectid=12163217
Newshub (5th December 2017) “80,000 in line for Government fees-free education scheme” https://www.newshub.co.nz/home/politics/2017/12/80-000-in-line-for-government-fees-free-education-scheme.html
Ministry of Education (2018) “Participation rates in tertiary education”, Wellington: Ministry of Education.
Ministry of Education (2018). “Student Loan Scheme Annual Report 2018”, Wellington: Ministry of Education.
OECD (2018), “How do admission systems affect enrolment in public tertiary education?”, Education Indicators in Focus, No. 63, OECD Publishing, Paris, https://doi.org/10.1787/41bf120b-en
Ministry of Education (May 2018) “Affordability of Tertiary Education to Students”. Wellington: Ministry of Education.
Productivity Commission (2017). “New models of tertiary education - final report”. Chapter 10 “Trends”.
Claudio E. Montenegro and Harry Anthony Patrinos (2014) “Comparable Estimates of Returns to Schooling Around the World”, World Bank Policy Research Working Paper http://documents.worldbank.org/curated/en/830831468147839247/pdf/WPS7020.pdf

[Editor’s note: This post was previously titled “Dissecting an uneducated opinion.” However this title is closer to the mark.]