The cost of an education

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1880s, 1890s, 1900s, 1910s, 1920s, 1930s, 1940s, 1950s, 1960s, 1970s, 1980s, 1990s, 2000s, 2010s, allowances, bursaries, fees, loans, scholarships

Students protest about the rising costs of education, 28 September 1993. Image courtesy of the Hocken Collections, OUSA archives, AG-540/011, S15-500b.

How much did you pay for your degree? This year marks the 25^th anniversary of the introduction of the ‘user pays’ philosophy into New Zealand tertiary education, so I thought it would be interesting to look back over university fees through Otago’s history. Comparing costs over a long period is not straightforward, but fortunately the Reserve Bank’s inflation calculator at least allows us to take inflation into account. In the graph below, I have calculated the total compulsory annual fees for the cheapest degree, a Bachelor of Arts, at every tenth year – these include tuition fees, exam fees (a substantial additional cost until the 1960s), various administration fees and students’ association fees. I adjusted these totals according to the Consumer Price Index to 2015 equivalent values, giving a rough idea of the changing ‘real’ costs over the years.

Otago students made a substantial financial contribution towards the cost of their education in early years, but fees remained unchanged for long periods and with inflation their real costs declined. In 1920 tuition fees were much the same as they had been in 1880, at three guineas (£3 3s) for each ‘standard’ course (an arts subject, for instance) plus an administration fee of one guinea (£1 1s). Examination fees – payable to the University of New Zealand – added costs of a guinea per subject (and there were also additional one-off charges for the award of a degree, not included here). From 1890 there were also students’ association fees to take into account: in 1920 these amounted to 10s 6d for men and 7s 6d for women (the gender differential disappeared soon afterwards).

Specialist degrees cost more. The 1920 calendar advised that the total tuition, administration, OUSA and University of New Zealand fees for a five-year medical degree came to £177 9s ($15,728 in 2015 values), provided it was completed in the minimum time; for the many who repeated years it would cost more. At the same time a four-year dentistry degree would set a student back £120 15s ($10,702 in 2015 values) and a four-year home science degree cost around 55 guineas ($5119 in 2015 values).

Fees were relatively high again in 1930 and 1940, but declined steadily in real terms through the 1950s before jumping significantly in the mid-1960s; by 1968 they had reached their highest level to date. The 1970s and 1980s were decades of high inflation. While OUSA fees crept up as a consequence, tuition fees remained unchanged from 1968 to 1981, meaning a very significant decline in real costs; small rises through the 1980s were well below the rate of inflation and by 1989 compulsory annual fees were at their lowest ever level: tuition fees cost $288, OUSA fees were $101.20 and the welfare service fee $26.40, making a total of $415.60, equivalent to $754 in 2015 values.

In 1990 tuition fees jumped due to major government reforms, part of the neoliberal revolution of that era. Tertiary education, once seen as a public good, was redefined as a private benefit to which students should make a more significant financial contribution: ‘user pays’ was the mantra of the age. OUSA campaigned vigorously against the change. In 1989 over 5000 members joined a protest march, over 4000 signed a petition and over 3000 wrote to banks opposing a proposed loans scheme. Other than a delay to the loans scheme, such protests (which took place all over the country) were to no avail and Otago’s tuition fees quadrupled overnight, from $288 in 1989 to $1250 in 1990. Worse was to come as the new National government came to power in 1990 and continued the reforms commenced by the Fourth Labour Government. The government steadily reduced the level of funding per student, leaving universities no choice but to increase their fees; by 2000 tuition costs to students had doubled again and they continued to rise steadily through the twenty-first century. One rationale behind the reduction in government funding per student was to offer more places and make tertiary education more widely available; that was achieved, as student numbers grew, but it came at a heavy cost to students.

Of course, fees do not tell the whole story; they don’t even account for the entire cost of study. All students had to purchase text books and many had extra expenses for field trips, equipment and so on. These could be considerable. To take just one example, 1920 dental students (mentioned above) could expect to pay about £8 for books and £36 for instruments (a total of $3900 in 2015 values), increasing their course costs by more than a third. Though they could use these items once they had graduated, or sell them on, they still had to come up with the funds to begin with. Accommodation and living costs were another considerable financial burden for students. Unlike fees, these tended to keep pace with inflation, meaning their real costs did not fluctuate so dramatically through the years.

On the other side of the ledger was student income. There were always scholarships – funded by the government, the university or benefactors – for the most gifted students, but what of the average student? In Otago’s early decades few people from working class backgrounds made it to university; it was simply beyond their financial means and many did not even attend secondary school. Some wealthy university students were supported by their parents, but others generally had to work while studying part-time. Many classes were held in the evenings to cater for the large number of students who worked full-time, frequently as teachers, and Otago was sometimes known as ‘the night school on the Leith’.

In 1907 the government introduced bursaries which covered tuition fees for those who obtained credit in the scholarship exam, but were not among the handful eligible for a scholarship. This still provided for only the top echelon of students. Over the next fifty years new provisions evolved and by 1959 – the year of the Parry Report on New Zealand universities – there was an array of schemes offering assistance to about 60% of New Zealand students. The level of support, however, was low – many received only the cost of all or part of tuition fees, with no living allowance. Meanwhile, generous grants, covering both tuition and living costs, were paid to those on teacher studentships, though this bonded recipients to government service after graduation. The report suggested ‘more generous general bursaries are required in order to induce more young people to forgo immediate earning power and undertake full-time university study.’

From 1962 a more generous scheme essentially paid the tuition fees of all students eligible for entrance to university. In addition, full-time students with Higher School Certificate, plus those without HSC who had passed a first-year course, received a bursary. With the addition of vacation earnings, most students could survive on this bursary and full-time study became more accessible (particularly to men, who could earn more in holiday work than women). With various modifications this bursary scheme remained in place until 1989, although payments did not always keep pace with inflation and holiday work was not always readily available. The economic reforms of the late 20^th century spelled the end of this bursary scheme, and from 1989 students received a less generous student allowance, means-tested according to parental income (or their own income if 25 years or older). In 1992 the student loan scheme began and students, who now had to pay for rapidly increasing tuition fees, could borrow from the government to fund their study. Student loans initially charged interest from the time they were drawn down. From 2001 interest was not charged until a student had left education, and interest was abolished in 2006 for those who remained living in New Zealand. Over time, access to allowances tightened up and more and more students needed to borrow to cover living costs as well as fees, with increasing complaints of the inadequacy of student allowances; many students accumulated large debts.

Ready access to a full-time Otago education is no longer limited to the well-off or the very clever, as it was in the university’s early decades. But the broadening of participation has been accompanied by higher fees and lower allowances, with government loans becoming the means to tertiary education for those without privileged backgrounds. Scholarships are now more important than ever for those who want to graduate without a large burden of debt, and the University of Otago recognises this: a recent announcement of new and improved entrance scholarships will be welcome news for some.

Another photograph of the Otago student protest against rising fees, 28 September 1993. Image courtesy of the Hocken Collections, OUSA archives, AG-540/011, S15-500a.