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Effects of Allowance

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Submitted By yassinpangadapun
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Effects of allowance
Efficiency considerations
While the scheme is efficient in that it does encourage access to tertiary education through breaking barriers concerned with cost of tertiary education, there are some efficiency considerations concerned to the provision of student allowances which need to be addressed.
Due to the fact that once the student earns over $195.78, the student allowance payment is abated at one dollar per dollar earned acts as a disincentive for the student to partake in paid work, in order to receive ‘free’ money. As well as this, it may encourage the student to find work which can be paid under-the-table, so as to have access to more money on a weekly basis. Rather than ensuring that the allowance helps those who do not have access to enough income to support themselves while studying, it rather recommends that the student limits their hours of paid work in order to receive the same amount of money as someone who may have to work to receive it.
Being that the student allowance is based on the income of the parents for under 25 year olds, efficiency is also compromised as it allows for some students whose parents are self employed to receive the benefit, through the parents ability to ‘hide’ their actual income; which does tend to occur.[9] The result of this is that a proportion of the students receiving the allowance on the premise that they are from a lower income background, are actually made better off than many of those who, not only do not receive a student allowance, but whose parents earn slightly over the threshold.
Coupled with this, the policy doesn’t take into account the students who are forced to live away from home in order to attend university. While the policy has slightly different qualification rates dependent upon whether or not the student is living within the parental home, it does not take into account the…...

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