Surviving student life: coping with rising living costs

Sometimes she wants to quit one of her jobs but can’t because of the rising cost-of-living and because she believes she’s too old to scrape by anymore. Being five years away from thirty makes Charlie feel like it’s time to move past the times of being frugal – easier said than done.

While she’d rather completely replace her old library job with her new tutoring job, she can’t do it.

“[The library] only gives me 10 hours now, and with tutoring I’m contracted for 16 hours of pay. So, it works out better to be doing 26 hours [between the two jobs] rather than 16.”

Prioritising her studies has been difficult with her financial stress, and she’s also had to move into a commercial building this year with six other people to help cover rent costs.

Charlie also has an overdraft to support her. This has become more essential now that she’s no longer eligible for Student Allowance. Sometimes she takes money from the available Student Living Costs, but usually regrets doing so when it adds to her $70k loan.

Charlie’s juggling of financial options is not uncommon among students.

Managing the cost-of-living

The increased cost-of-living is the biggest stressor for consumers aged 18-39, according to our 2023 Sentiment Tracker.

This financial stressor means more consumers are dipping into savings. Last year 57% of those surveyed were unable to save more than 5% of their income.

Charlie lives pay-check to pay-check and if she manages to build some savings it usually disappears when a bigger cost comes along.

“I mean, it’s like when you’re poor and then you get the money, you’re like still poor because well now it needs to go to everything that was owed… and I haven’t paid any Afterpays in like a month,” Charlie told Consumer.

The New Zealand Union of Students’ Associations (NZUSA) told Consumer that at the end of 2022 approximately 72% of students surveyed had stress and anxiety due to the cost-of-living crisis.

While students have access to student loans and overdrafts, these can place a huge financial strain on students.

NZUSA National President, Ellen Dixon dismisses the argument that student loans and overdrafts are easy to pay off once you start working full-time. She's calling on the government to do more to support students and the education system overall.

Where can students go for financial support?

Without more government support, universities and student unions are left to provide financial support for its students.

“Solutions [continue to] fall back on an overworked education sector. Tertiary institutions are providing hardship grants with local city councils and the Ministry of Social Development,” Ellen said.

“Student associations continue to support through foodbanks and connections to wider social services. Non-government organisations provide budgeting awareness and connections to social workers.”

Victoria University of Wellington has a Student Finance resource, as well as a Student Hardship Fund. However, this fund is only available to students who need urgent financial help and is at the discretion of an advisor.

On top of this, Victoria University’s Student Association offers food assistance, bus passes and free menstrual products to students. Yet they also recognise this isn’t enough.

“Yet again, the responsibility for our rangatahi is falling back upon the resilience of the education sector, during a period when our educators are suffering from low wages and long hours. We need a more courageous response by our government to our current economic crisis, and its impact on students and education,” Ellen said.

Outside of organisations doing what they can to help students, what are most students able to do to support themselves? The answer is to work more.

In 2019, Te Pōkai Tara, Universities New Zealand shared that 81% of university students juggle study and work, and around 66-75% of students in Polytechnics and Wananga.

Full-time undergraduate study expects students to put in 30-40 hours of study per week. Te Pōkai Tara averaged that students who are also working, do around 10-13 hours a week on top of this. In addition, NZUSA identified students were increasing their work hours to 20-40 per week and deciding to study part-time or remotely instead.

Te Pōkai Tara also noted an increase in work during holiday periods. This shows students are using their breaks to work more. This is likely to support themselves during returning study periods when they have less free time to make money.

In debt at eighteen

Charlie started her studies when she was 18. She was moving from Rotorua to Auckland, starting a new chapter in life and had never managed her own money where rent, bills and groceries had to be considered. This is why the idea of having an overdraft as a safety net was so appealing.

“[I got my overdraft] because the bank asked me if I wanted one and I was 18 and I didn’t know any better,” Charlie shared with Consumer.

An overdraft gives you access to more money than you have available in your account, up to a certain limit. You’re charged an interest fee if you use your overdraft. If you exceed your limit, you are charged more. This interest rate can vary between banks.

If you’re a student, overdrafts are usually interest free while you're studying. However, if you’re still using your overdraft once you finish your studies, you will be charged interest. Unless your bank offers a graduate package that doesn't charge interest.

Having an interest free overdraft as a safety net may seem appealing while studying or finding your footing in life, but it can get out of hand. Charlie can’t picture herself paying off her overdraft any time soon.

Charlie’s overdraft is $1600.

“This week when I get my two grand from my summer scholarship, I totally [wouldn’t have to] have an overdraft anymore. However, that will be all the money that I have… If I got like $4000 [I could pay it off], I mean I will eventually get that but not in one payment… unless I’m lucky.”

Between rent, bills, food, transport, and overall expenses for a balanced life, Charlie can’t afford to pay off her overdraft when she has other financial concerns higher on her list.

While she is trying to pay off her overdraft, it still feels largely unattainable.

In our latest banking survey, we found on average 13% of respondents had overdrafts. On top of this, the Reserve Bank of New Zealand says there’s $369M across overdraft loans in Aotearoa.

Study support

A few months ago, Charlie almost increased her overdraft. She was moving house, starting a new year of study, and going through other busy life changes. She knew her financial situation was adding to her stress. At this stage it seemed sensible to raise her overdraft limit – just in case.

She didn’t though.

“I almost had a meeting to [raise the limit], but then I got my course related costs. But now I’m poor again,” Charlie shared.

Course Related Costs offers an extra $1000 a year for students to pay for products and services directly related to their studies. However, whatever you use gets added to your student loan.

Anecdotally, we’ve heard many students end up using their full allowance, and usually for general living costs instead.

Some students use their Course Related Costs for help with their bond or other establishing costs for the year. Charlie used her payment in her first year to buy a moped scooter so she could travel to classes and work more easily. This purchase made sense for her with unreliable public transport that adds up over the week.

What government support is available?

In July 2022, Green Party MP Chlöe Swarbrick shared the People’s Inquiry into Student Wellbeing, revealing that thousands of students are living in poverty.

The results showed students who are flatting spend 56% of their weekly income on rent. Swarbrick said it's recommended we shouldn’t be spending more than 30% of our income on housing.

The report also shows that two-thirds of students regularly do not have enough money for food, clothing, bills, health care and other necessities. Students who identify as disabled, Māori and Pasifika are more likely to be in these financially vulnerable positions.

In March, the Government raised Student Allowance by $20. They claimed this would help with rising cost-of-living and worked to manage inflation. While the increase may just cover the year’s inflation, it is still an insignificant amount when students are unanimously reporting financial struggles and an inability to cover necessities.

StudyLink offers additional financial support for students. There’s Student Allowance, Student Living Costs, Jobseeker Support Student Hardship, an Accommodation Supplement, and support for moving house or if you’re underage.

Of these, both Student Living Costs and moving house support you'll have to pay back.

Student Allowance is only available if your parents earn under a certain amount of money, or you’re at least 24 years old and have an eligible income. There are other factors which are considered with these payments however, like partners and children.

In 2022, 51,426 students received Student Allowance. This number has gone down 18.1% since 2021 and is the lowest it’s been in recent years.

Currently, if you’re under 24 with no partner or children, the max weekly allowance you can receive is $341 before tax. If you’re 24 or over with no partner and children, it’s $392.

*name changed for privacy reasons.

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