Uni students face $10,000 ‘shortfall’ in living costs

Student loans don’t stretch as far as they used to.

There’s been a sharp rise in living costs for students in the capital, and somehow, each student has to bridge the gap.

“Despite using the student loan or getting the student allowance, your total shortfall for weekly living costs plus all other expenses could add up to more than $10,000 a year,” Victoria University of Wellington’s 2023 Managing your Money report warns students.

In 2020, the report’s sample budget had weekly living costs of $432 plus annual extra costs (clothes, haircuts, trips home, flat bond and course-related costs) of $4900.

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The sample budget for 2023 has weekly costs of $488 plus annual extra costs of $5000, which works out to $96 a week.

There’s a less-daunting price tag to studying in the South Island. The University of Canterbury estimated a flatting student could expect weekly costs of $348 plus annual extras of $3625.

In 2020, the costs estimated were $329.50 a week, plus $3265.

What choices do students have?

Sam Blackmore, a law student at the University of Canterbury, says students aren’t a homogenous group, and their ages, wealth and ways of funding their tertiary studies vary widely.

Blackmore says many have such an income deficit that they are sacrificing basic needs to get by every day.

Student poverty comes at a price, as much is funded by student loans, which will load graduates with an extra 12% tax on their earnings over $21,268 a year, until they’ve finished paying it off, Blackmore says.

The more they have to borrow to get by, the longer graduates would spend repaying loans, Blackmore says.

Some choose to live at their parents’ home while studying, keeping down their costs, while some come from affluent-enough families their living costs get paid.

Living at home when studying gives students a massive financial advantage, even if they feel it’s a social drawback.

Instead of living costs of just over $25,000 a year, they could squeak by on just under $7000, according to Victoria University, though that requires their parents to keep footing their food bills.

These students’ living strategies are reflected in the latest student loan scheme annual report, which showed just 59% of students who were eligible to borrow for living costs (up to $281.96 a week), actually borrowed the money. A similar proportion didn’t take the $1000 loan on offer for course costs.

These numbers correspond closely to one of the findings in the People’s Inquiry into Student Wellbeing, which was released in July by the Green Party, and which showed thousands of students were not adequately plugging that gap, and were living in poverty.

The inquiry report, which covered the lives of just over 4500 students, found 40% had financial support from family.

Green MP Chloe Swarbrick says many people accept students living in poverty as “just part of student life”.

But, she says: “Living in a state of poverty isn’t an inevitability, it is a political decision.”

Most students also work while at university, but the $10,000 gap Victoria identified would require about 550 hours of work each year at a minimum wage, or around 10-and-a-half hours a week.

The data from the People’s Inquiry shows that is what many do – 68% of full-time students covered by the report worked. Of those, most did between six and 20 hours a week, it said.

But even with that, two-thirds of the people responding to the survey said they didn’t have enough money to cover basic costs including food, rent and healthcare.

A small minority, roughly 3% to 5%, work full time, and squeeze study in round the edges.

Blackmore is working all hours as he enters his last year of study. When he’s not working to earn, he’s studying.

“I’ve quite enjoyed being able to study and work flexibly because everything’s been online,” he says.

At the end of the month, he steps down from the paid position of vice president of New Zealand Union of Students’ Associations, but then he starts a new role with Surf Lifesaving.

“This year, for the most part of the year, I’ve worked nearly 40 hours a week, while being in full-time study,” he says.

It’s been tough, and tiring, but Blackmore is 27, and feels pressure to work, so there are no gaps on his CV.

But his partner works as well, which has been hugely helpful, he says.

Desperation strategies to cover lean times when money ran short including simply “going without” until more money came in, such as not going to the doctor, or dentist, and skipping meals.

Others borrowed from family or friends, or took out loans from finance companies and banks, or put off paying bills.

The biggest contributors to living costs are rent, and food.

Victoria’s sample budget of $488 a week included $230 of rent, and $100 of groceries.

Students frequently tried to save by going for low-end, unhealthy rental properties, the People’s Inquiry indicated.

One in seven of the students who responded to the People’s Inquiry said their rental did not meet basic needs, such as warmth.

Auckland and Wellington were the most expensive places to rent, they said, indicating provincial universities offered the prospect of lower living costs.

Living in a hall can simplify students’ lives, and reduce the risk of shenanigans in shared flats landing them with unexpected costs.

Victoria Uni points out that there are no transport costs as halls are generally within walking distance of its campus, and in many cases, electricity, internet, and food are included in the room rate.

It quotes $19,504 hall costs for the year, but says students should expect to shoulder additional costs of between $6925 and $9070 each the year.

Scholarships and grants can help meet costs, and some people qualify for a student allowance ($279.97 after tax for a single person not living with a parent), but for people aged under 24, that depends on their parents’ incomes, which have to be less than $119,202.07 combined, if the student is not living with them.

Every dollar not borrowed to spend on living costs, means less student debt, and private bank debt (overdrafts and credit cards) that has to be repaid after graduation.

This is especially important for people intending on heading overseas after they graduate, as it’s all-too easy to get into trouble on repayments, and see interest and penalty interest increase their student debt.

The latest student loan scheme annual report shows 106,612 borrowers were overdue repayments, and 73% were overseas-based.

Words of wisdom

Victoria University of Wellington’s 2023 Managing your Money contains “words of widsom” from former students on their money-saving tips.

• “In the summer holidays before university starts, get a full-time job and save. You never know when or where you will be able to get a job during the trimester, and it is better to have some money saved up.”

• “Despite what everyone else is doing, use your money designated for course-related costs for the things that are actually course-related. It’s a $1000 debt you can avoid, if you don’t use it for personal things such as going to concerts or buying alcohol.”

• “Don’t spend money on takeaways and other meals, if you’re already paying for meals at a hall of residence.”

• “Budget, budget, budget! Shop at the vegetable markets and learn to cook. Make your own coffee. Get out a set amount of money in cash each week and use that for spending.”

• “Eftpos cards are too easy to use, and you don’t keep track of how much you are actually spending. Avoid using Afterpay, Uber, Uber Eats, and other similar services.”