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September 23, 2013 | by  | in Features Homepage |
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Fee Fi Foe Fumble

Last week, the University Council voted—somewhat unsurprisingly—to increase your fees by four per cent. Last year, they did the same. And the year before that. And the year before that. The cost of your degree is forever rising. But how does it all work? Will fees always rise? Are students getting a raw deal? And what can we do about it? Duncan and Cam investigate.


Q1: How do fees work?

In the early ‘90s, the government paid for the bulk of your education. They funded 90 per cent of your degree and set the fee level for the ten per cent that you paid. For your average student in 1990, fees were set at a flat rate of $2085 in today’s terms. In 1993, founded on a philosophy of cutting spending, the National Party began decreasing university funding levels and simultaneously transferred the responsibility for setting fees to university councils. As you can imagine, when the body in charge of setting fees was also the body receiving those fees, prices skyrocketed.

Then Labour took over and sought to halt astronomical fee rises. They froze student fees. In the years following, they introduced the Fee Maxima, which allowed university councils to increase fees each year, but by a maximum of four per cent. That maximum remains today. Nowadays, university management recommends the level at which fees should rise, with the University Council (which is made up of representatives from the Uni, the Government and the student body) having the final say. Without fail, fees rise each year by the maximum amount. The ceiling has become a flaw.

TL;DR: Through a complex and confusing process which inevitably leads to students having to pay more.


Q2: Does the uni have to raise them all the time?

Some would say that they don’t. They will point to the fact that Massey a few years ago did not. Many students view the University Council as a group of greedy villains who don’t care about students and only care about profit. But Ian McKinnon, Chancellor of Victoria University, thinks that is a mischaracterisation. As a University Council member, McKinnon wonders: “Why would you enjoy disrupting your student body? Why would I want to kick the students in the guts?” When governing, “You are there for the betterment of that body.” Sometimes, McKinnon believes, that means making decisions that are “not palatable for students… We have a responsibility to ensure the viability of the University.”

It would be unfair to say that the University could continue to operate without increasing its funding each year. There are a number of reasons for this: first, Labour’s across-the-board fee freezes had the effect of locking in disparities in fees between universities. Put simply, in the 1990s, Auckland and Otago had better law schools and therefore charged more for them. Since then, Victoria’s Law School has risen to be the top Law faculty in the country. But the Fee Maxima has meant that we can’t increase our fees to Auckland or Otago levels (because theirs increase by four per cent each year as well), and therefore we have less money to spend on a better school.

Secondly, the University faces rising costs. Inflation alone means fees must rise by about one per cent each year just to keep the same amount of stuff. Boring accounting stuff like the depreciation on assets means annual increases in costs. In order to compete in an international market for lecturers and equipment, the University has to be prepared to pay top dollar. The Tertiary Education Commission mandates that the Uni run at a three-per-cent surplus each year.

Interest-free student loans exacerbate this problem. As McKinnon notes, student loans are not interest-free. In fact, the Government pays the interest on your loan for you. But this money is taken out of the tertiary-education budget as a whole. The more the Government has to spend on your loan and its interest, the less it has to spend on your uni. The result is a bizarre money-go-round: interest on student loans leads to less government funding, which leads to universities having to increase fees, which leads to increasing amounts of interest on student loans. Which is pretty shit.

What about just increasing the total tertiary-education budget to suit everyone? Fat chance. Tertiary education isn’t foremost in the wider voting public’s mind when it comes time to make the three-yearly trip to the ballot box. Fee increases and the erosion of quality are slow and subtle changes. They happen over a long, drawn-out period, which means students generally don’t cause too much of a stink. Moreover, the current government has argued that universities provide largely a private benefit and so should be funded by the private individuals who are benefiting from study. That’s why it has not increased the per-student grant to reflect cost increases. In fact, it has moved to reduce the burden it has to pay to 70 per cent, with students having to make up for the rest. Prospects of funding increases are grim.

Ultimately, the Government has offloaded responsibility for your fee rises, deflecting the responsibility of fee-setting to universities and leaving them to suffer the social and political flak. David Alsop, one of two Student Representatives on the University Council, believes that, “there is a perception among students that fees are rising and quality is remaining static, or worse, falling… If this perception is maintained, there is a negative reputational effect on the University”. The Dominion Post was so eager for an anti-university spin on fees that last week, it misquoted VUWSA President Rory McCourt as saying that the Uni was increasing fees by $2500—ten times the actual fee increase. Perhaps this issue has come to a head most clearly at the University of Auckland, where students are locked out of their fee-setting meeting due to the intensity of their protests. There, the relationship seems broken. However, this is more a function of structural changes by successive governments than a fault of university management.

TL;DR: Not necessarily, but it’s inevitable largely because of successive governments’ policies.


Q3: Do we see an increase in quality relative to increase in cost?

Fee increases are not a bad thing per se. If fees went up four per cent, but the quality of the University went up ten per cent, there would be no problem. The larger issue is whether we actually do get four-per-cent extra value to match the fee increase. Anecdotal evidence suggests students don’t feel that we are. There are fewer tutorials. The Gender Studies department was axed. The Politics department suffered massive cuts. Of particular concern is a shift in focus away from hands-on time and toward less student-oriented endeavours, namely research. Along with per-student funding, universities also get government funding through the Performance Based Research Fund. Basically, it incentivises good lecturers to spend more time researching, and less time in the classroom teaching. McCourt agrees:

“There is such an emphasis on research at the moment that we have great lecturers who are being pushed into the back office to do more research. We have less contact time. You have international students at undergraduate level who are treated like cash cows. It’s because it’s not about teaching and learning anymore. It’s about research.”

The University disagrees. McKinnon argues that: “Universities are a dual motorway. Both carriageways matter: the research carriageway and the teaching-and-learning carriageway.” This year, we were rated the best university for research in New Zealand. We are producing students who go on to do amazing things: whether that be being shortlisted for the Man Booker Prize or playing for the All Blacks.

So students and the Uni disagree on whether quality is increasing. What’s new? The real issue is that there is no way of breaching that divide. There is a dearth of information available to students as to the University’s justification for fee rises. The document produced for students outlining the reason for fee increases spent only half a page giving vague reasons for spending increases, but failed to show exactly where the extra money was going. Apparently the money is partially needed to continue “…development of Victoria’s distinctiveness, engaging with New Zealand, connecting with the world”. Whatever that means. It’s impossible to say whether the four per cent has improved quality if we aren’t even told specifically where that four per cent has gone.

Further, the Uni might say that quality has increased, but they fail to put their money where their mouth is by using student satisfaction as a metric for justifying fee rises. It is preposterous that a company would not take into account customer satisfaction when deciding its prices, but that’s what happens thanks to the current processes in place.

McKinnon disagrees with these criticisms. He argues that providing so much information would be “a macro exercise”. “If you tried to do the cost centres for the whole of the University… I’d probably have to employ two more staff… It would be a bible… an exercise in detail which would require enormous analysis over a long period of time.”

On measuring student satisfaction, McKinnon believes that “that would be a very, very subjective way to determine the funding… Half the class are little nerds who breeze round the lecturers… the other half want to get through their degree… a third of them play snooker and go off to the pictures.”

All this amounts to is the University sidestepping its obligation to us. It considers us too ignorant to know what we value in our education. It believes it’s too expensive to tell us why our fees are increasing: to let us genuinely engage in a conversation about fee rises.

TL;DR: It is unclear: students say one thing, the Chancellor says another. But the main thing is that the Uni makes it nigh on impossible to find out.


Q4: How do increased fees affect students?

For the students who are most sensitive to price (read: disadvantaged people from poor backgrounds), increases in fees mean that they simply can’t go to university. Full stop. People’s minds are being held to ransom by a system which is more interested in their wallets. However, the University has actively tried to remedy that situation. McKinnon is emphatic: “Victoria spends a lot of time putting in place measures to counter these things. We have scholarships. We look to benefactors to assist us… We actually put a lot of supports in place for Māori students, for Pasifika students. We really go out of our way to try and assist people coming in.”

For the overwhelming majority of students, though, the harm is far more pernicious. On the list of pros and cons guiding your decision to study at Vic, price of courses is somewhere at the bottom, if it’s even there. Other factors play a far more important role: do you like Wellington as a city? How far away is it from your hometown? What uni are your friends going to? What value does your family place on education? What course of study are you planning on pursuing?

Moreover, we get interest-free student loans. We don’t have to pay them off until some point in the future. We don’t know how much they will be, but know they will likely be in the tens of thousands. What the fuck do we care if our 40-year-old selves have to pay a couple hundred extra dollars? We don’t actually feel the cost of the increase, so we are less likely to be engaged.

At the same time as degrees are becoming more expensive, their value as future earning tools is falling dramatically. ‘Degree inflation’ is the fancy term for saying that your Bachelor of Arts degree isn’t worth anything at the interview when all the other applicants have one too. When hardly anyone went to uni, graduates slipped straight into well-paying jobs, helping them to pay back their loan. This made the whole exercise worthwhile. Now, more and more graduates fall into shitty jobs at McDonald’s and Countdown with shitty pay and a massive shitty mountain of shitty debt that they’ll never be able to pay off.

TL;DR: Most of us will still study, but we will pay more for it and get less out of it.


Q5: So what do we do?

Successive governments have attempted to change the culture surrounding universities to make them feel and act more like a business. The problem is that students aren’t able to act like your average consumer. McDonald’s don’t make Big Macs with shit ingredients and price them at $50 because if they did, we would go to BK and buy Whoppers. But that expression of our opposition to a company’s business decision is not available within a university market. All universities increase their fees by four per cent, and students choose their universities based largely on factors that are not related to cost or quality.

Given our inability to disengage with the University in order to signal our dissatisfaction, we must be more open to constructive engagement. We are trying. The Chancellor gives “…full marks to the student leaders and the students themselves… They were prepared to listen.” In fact we do have a model of cooperation, pioneered by Victoria and emulated around the country, which forces the University to take student satisfaction into account. The Student Services Levy, which is separate to fees and pays for services such as student health and student learning support, is also decided on by the University Council. However, the recommendation must factor in consultation with students.

Perhaps the future will provide an answer. Universities, through the internet, are breaking down the costs of getting a degree. You can now get a degree from Princeton from anywhere in the world, using only the internet: watching lectures online, chatting with fellow students online, setting tests online; and all for a fraction of the price. A shift to e-learning changes the market for tertiary education, forcing universities to compete. When you can study from anywhere, price and quality are now all that is important. Exciting.

TL;DR: Keep on voting for strong student advocates who cooperate with the Uni Council. Get excited about the internet and its implications for the future of learning. Resign yourself to the fact that fees will rise by four per cent every year you’re at uni, but realise that this isn’t necessarily a bad thing.


Fees are rising. They will keep rising. Both Government and the University have used fees as a political plaything, entrenching a complex web of contradictory policies. The University thinks we are unable to decide what we need in our education. The Government believes fees will never become an election issue, and hides behind interest-free student loans to justify their cuts. The system is broken, but that doesn’t mean it has to stay that way. Systematic change is possible, but only with systematic engagement by students, Government and the University.

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  1. I think students should get a support or stip, that would also rise each year by a certain percentage. This would help them to keep up with the taxes but also with the inflation rate, that is also raising each year.

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