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New Zealand: A small far away country from which we can learn much?

  • 2 August 2016
  • By Sam Cannicott

This guest blog has been contributed by Sam Cannicott, who has been the Education Policy Adviser for the Liberal Democrats (2007-2010) and a Policy and Strategy Adviser at Regent’s University London (2012-15) and who now lives and works in New Zealand.

New Zealand has a population of under 4.5 million and only eight universities.  Despite the difference in scale, the UK could still learn from the way in which New Zealand has approached higher education challenges.

Many of the debates and policy questions ring bells in the UK.  The size of the student loan book has raised concerns. The growth of a mixed market of public and for-profit providers has been controversial. And a push to increase participation has triggered questions about quality. New Zealand’s approach to higher education is explored in my paper for the Higher Education Policy Institute.

A particular challenge for New Zealand has been to ensure graduates who head overseas repay their student loans.  The overseas experience or ‘OE’ is a rite of passage for many people growing up in New Zealand.  It is generally encouraged and those who return contribute new skills and experiences.  However, those that do not come back fairly quickly often fall behind with their loan repayments. Despite the vastly different size of the student loan book in the UK and New Zealand, the amount owed by overseas borrowers is nearly equal at around £1.5 billion.

The steps taken by the New Zealand government to secure repayments highlight the timidity of the plans outlined in UK earlier this year. New Zealand is prepared to arrest former students who are behind in their repayments at the border. Such an approach, coupled with increased efforts to communicate directly with former students, seems to have prompted many of those who owe money to begin paying back their loans.

New Zealand has also taken the step of breaking the link between income and repayment for graduates now residing overseas. Instead, they must now make set repayments regardless of their income. This removes the bureaucratic barriers of having to assess the incomes of those who are now abroad. Such an approach was rejected by the UK Government, when it was proposed by the BIS Select Committee in 2014.

The UK has a particular challenge around collecting repayments from EU citizens who studied in the UK. Brexit presents an opportunity for the UK to learn from New Zealand because there is less need to ensure the repayment terms of EU students are the same as those for domestic students.

Efforts have also been made in New Zealand to present making loan repayments a national duty. Shortly after the earthquakes which devastated Christchurch in 2010, a campaign was launched to urge expat Kiwi graduates to make contribution to the Christchurch earthquake recovery by paying back their student loans. The UK appears to have shied away from highlighting the duty that former students have to repay the money they owe.

Those in the UK worried about the cost of the student loan scheme may also look at how New Zealand has attempted to speed up the repayments of graduates who have not headed overseas. In 2012 the New Zealand Government increased the repayment rate for borrowers from 10 per cent of earnings to 12 per cent. This affected existing borrowers and not just those entering the system.  It was controversial, but the fact that former students would now repay their loans more quickly, was described as ‘good news’ for graduates, by Prime Minister John Key.  While it may seem counter-intuitive, such a positive presentation aligns with findings of the 2014 University Alliance survey which suggested undergraduates would prefer to repay their loans back faster.

Although it is English speaking, New Zealand’s perceived remoteness means it must work harder to recruit international students. The country’s, cross-government strategy, puts the UK to shame. Importantly, New Zealand has focused on developing a pipeline which has included opening up the school system to fee paying pupils from overseas. With higher education and schools now placed under the same Whitehall roof, such an approach could be considered in the UK. But ultimately, this would need to be signed off by a Prime Minister who has yet to show whether she truly values the contribution of international students.

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