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The cost of being a student
Published on 05/03/2026
By Nihal Sohanpal & Shamubeel Eaqub - Simplicity Research Hub
Being a student used to be tight. Now it could easily be a trap for the unwary.
In 2005, the average student could just about make it work. A weekly student allowance of $160 against essential costs of $140 left a slim $20 buffer. Not comfortable, but survivable. Rent was $86, food $42, electricity $11. You could manage, especially if you had a part time job too.
Fast forward to 2025 and that buffer has flipped into a deficit. Student support has risen 86% to $296 a week, but the cost of essentials has increased more (by 220%). Rent is now $193. Food $96. The $20 surplus is now an $8 weekly shortfall, before you've bought a textbook, caught a bus or bought a beer. You need over $300 a week just to live.
Student towns not as cheap
The student town discount has gone. Leaving Auckland for Dunedin or Palmerston North gave you much cheaper housing. In 2015, Dunedin and Palmy rents sat at 60% of Auckland prices. Today they're above 80%. The relief valve is closing.
Students are paying near-Auckland rents on student incomes, in cities that were never supposed to cost this much.
Tuition costs and payoffs from education
Tuition costs have risen too.
- Universities: up 113% to $8.5k
- PTEs: up 70% to $8.9k
- Polytechs: up 60% to $5.9k
- Wānanga: up 40% to $4.5k
To pay for tuition and living costs, the median student loan balance has increased from ~$10,000 in 2005 to $24,000 in 2023, a 2.5x increase.
Fee-free first year helped at the margins. But it didn't bend the long-term trend. To add to this rising cost of education, the payoff from education is less generous than before.
New Zealand already ranks low among OECD countries on the income premium from tertiary education. And the returns are getting more volatile, not less. Post GFC, between 2009-2014, graduate incomes held up even as more people entered tertiary education. Pre-COVID, income premiums started flattening, and post-pandemic, returns have become dispersed and uncertain, with 25–34 year olds facing declining returns and stiffer competition than the cohorts before them.
A qualification still helps. But the field you study and the sector you enter now matter far more than whether you have a piece of paper at all. We are asking a generation of young New Zealanders to take on $24,000 of debt, live in a weekly deficit, pay near-city rents in provincial towns, and hope the income premium materialises on the other side.
Some will make it work. Many will be squeezed in ways that shape their financial lives for decades. Delaying homeownership, limiting savings, starting careers already behind, or getting ahead because of parental support.
How to make it better
This isn't a student problem. It's a wider society and policy problem. A non-exhaustive list of ideas is below.
Baby KiwiSaver.
This is for our grandchildren. We start every child into KiwiSaver when they are born, and redirect current KiwiSaver subsidies to them (around $10 a week). This would give them around $15,500 (excluding inflation) at age 18. It would go a long way to help them into the education pathway they want.
Index student support to actual living costs.
The gap opened because support and costs drifted apart over two decades.
Fix the housing problem, not just the student housing problem.
Rents in Dunedin and Palmy aren't high because students moved in, rather it was because we've under-built housing everywhere.
Better information on returns before students commit.
If the payoff from a qualification now depends heavily on field and sector, students deserve to know that before they sign up for $24,000 of debt.
Reimagine the student loan scheme.
Income-contingent repayment already exists, which is good. But with balances now averaging $24k and incomes more volatile, could there be a case for repayment smoothing (such as repayment holidays) when income drops, or maybe bonded or time-limited debt forgiveness for fields with demonstrable public benefit (teaching, nursing, social work, etc.) - where forgiveness is earned only after verified service.
Invest in non-degree pathways.
If a degree doesn't reliably pay off, we need trades, apprenticeships and micro-credentials that do. Wānanga fees have risen the least of any provider. Expanding accessible, lower-cost pathways with clearer labour market links reduces pressure on the whole system.
None of these are easy or cheap. But the current settings are asking young New Zealanders to carry costs that have compounded for twenty years. We want our young people to have access to affordable and high quality education. They are the future of our country.