An article in this morning’s Age reports on research from the On Track survey of recent Victorian school leavers finding that:
Thirty-seven per cent of regional students told the survey for State Government initiative On Track they were waiting to qualify for an independent Youth Allowance before studying, compared with 15 per cent of city students. The easiest way to qualify is by earning about $18,000 over 18 months before starting.
For eighteen months now I have been curious about why university students seem to be starting at a later age, with this kind of playing the Youth Allowance system being high on the list of theories.
Unfortunately, there was no data released for 2005 on the ages of students ‘new to higher education’, so I had to use the commencing student data (which isn’t as good, because it includes people transferring from other courses). While the trend of an absolute enrolment decline in ‘young’ commencing students, which I define as those aged 16 to 18, stopped and their numbers started to climb again, they continued to decline as a proportion of all commencing students aged 16 to 21. If the 16 to 18 year olds had maintained their year 2000 market share of all commencing students 21 and under in 2005, there would have been about 6,600 more of them at university than in fact was the case.
If the Youth Allowance independence theory explaining this trend is correct, receipt of Youth Allowance should be going up as more prospective students become alert to how the ‘independence’ test allows them to bypass the parental means test. But The Age reports that:
A rise in the cost of living, including climbing rents, has coincided with about 35,000 fewer students across the country qualifying for student welfare — Youth Allowance, Austudy and Abstudy — over two years. This is at least partly due to strict means tests that cut payments after relatively little is earned.
But this refers to all Youth Allowance recepients, not just higher education students. From the figures that have been published (unfortunately from various sources, as they are not released routinely every year) the number of higher education students receiving Youth Allowance increased by about 19,000 between 2000 and 2005. That seems consistent both with prior theories about changing ages of commencement and the data revealed by the On Track survey.
Even the broader decline in YA receipt may be families playing the welfare system rather than a real drop in social security support. Students receiving Youth Allowance cannot be counted as dependants for the purposes of Family Tax Benefit A, so it can make more financial sense to receive FTB A as a household than for the student to receive YA. The money can be passed on to the student who is also freed from Centrelink’s bureaucratic nightmare.
Andrew Norton 
Given the extremely high EMTRs in the YA parental income test (>100% is easy to achieve) it’s no wonder that students take one of the two roads you mention (independent status via work and deferred study, or FTB).
The YA parental income test is a bloody disgrace.
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I agree with spog. I wouldn’t so blithely assume that students and their parents are ‘playing the system’ – in many cases, it’s likely that their parents really can’t afford to support them, no matter what the YA parental income test says. I saw the report in the Age today too – the young man who was interviewed said his parents were already supporting two older sisters at university – in that case their EMTRs would have been well over 100%.
And while it may make more financial sense for families to claim FTB than YA, they still get less money when their children turn 16 than they get for 15 year olds, whether it is YA or FTB. Not the policy I would advocate if I really wanted kids from lower income families to finish school.
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I don’t seem to remember that the youth allowance system being very much different to what it was a long time ago when I went to uni — there were still rather odd rules then, so you had to be on the dole a while or over 21 to get Austudy (or whatever the exact rules were) or the amount you got was scaled according to your families income. Thus I’m not sure why it should be affecting rates much.
Actually, I’m surprised its not going down, since families are richer and more employed (hence making it harder to get), and students now work a lot more (hence cutting into the allowance).
On a side note, I’m still surprised that the system is still so crazy — it seems to me that once people are 18 they really should be considered independent adults (after all, we can send them to Iraq) — and lucky them if they happen to have rich parents. If it costs the government too much to give everyone the allowance, then I don’t see why it would just be simpler and more reasonable to set up a loans scheme for those that want to take it.
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Conrad – you’re right about families getting richer, so fewer students qualifying for assistance under the parental income test. But it is that one that really cuts into people entitlements not the personal income test which is pretty generous, at least by the standards of income support. That allows you to earn over $230 a fortnight without losing any of your YA, and every week that you earn less than that amount you get to ‘bank’ the unused free area to use another fortnight. As far as income tests go it a pretty good deal.
The parental income test on the other hand is as mean as it gets – much meaner than the income test applied to family tax benefit, which is why Andrew is probably right when he surmises that larger numbers of students are probably now just attracting FTB for their parents rather than getting YA themselves.
Unlike Andrew, I really don’t have a problem with young people taking a year or two off school in order to qualify as independent. People who don’t like it should be arguing for a significant increase in the generosity of the parental income test, so that it is at least comparable with FTB. And kids with really rich parents don’t tend to do it either, because their parents really can afford to bankroll them.
I’m not so fussed about whether parents can afford to send their kids to university, because in Australia it is pretty easy to go back to uni as a mature age entrant, but don’t forget that YA also covers the last two years at school. If the lack of adequate income support is causing lower-income kids to drop out of high school I would be concerned, though I’m not sure whether anyone has ever looked at this issue specifically.
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Let me add my metoo to the condemnation of the YA parental income test. It’s a good example of how not to design a means test.
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Here’s a few examples of what we’ve been talking about.
A family with one child aged 15 and one parent earning $750 a week ($39,000 a year) has a disposable income of around $40,700 a year. That is, they are still net recipients of ‘government largesse’, but only just. I wouldn’t think anyone would call them high income though.
When that child turns 16, their disposable income drops to $37,500 a year, a decrease of $3,200.
If they are unlucky enough to have twins the drop in income is greater (around $3,860).
These are just simple examples – you can get much worse outcomes than that. For example, a family earning $1000 a week and living in rented accommodation would lose more than $8,400 a year.
Now, I guess if you have a general objection to government handing money out to families you might think reducing their reliance on the public purse in this way a good thing. But it would be a bit difficult to deny that reductions in income of this magnitude that happen at about the time when children enter year 11 could possibly result in adverse outcomes of one kind of another.
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BG:
I actually think its a good idea that students take a year or two off (on the caveat that they actually do something rather than sit on the dole). The majority of our top echelon of students always comes from these guys who are a few years older (usually early 20s). Its amazing how a few years without university can increase literacy, numeracy, etc. The main problem is that these guys have a higher drop out rate, but then, I’m not fussed about that.
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These days you have to work during your time off to qualify as independent – you can’t do it, as you could once could, by “supporting yourself” on the dole.
I also think, given the financial commitment that students are now taking on through HECS, that it is a very good thing if they think carefully about what they want to do before embarking on a uni course. A year or two in the labour force is likely to be quite good for concentrating the mind, as they say.
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Independent youth allowance was the reason I quit uni and took a job in 1st year. Didn’t go back for another 5 years.
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I have now embarked on a year of three, maybe more, jobs in order to gain independence to get YA. my parents cut me off when i was 18, so im hardly ‘playing the system’.
what saddens me is that at the moment i am working at fast-food places, when what i want to be doing is studying medicine, so i can return, as a doctor, to rural australia.
a year might not seem too bad, but, yet another year without a local doctor is hardly beneficial either.
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Hello
Im 18 and I moved to the city to attend University but I am stuggling to afford basic things like FOOD…… I work 25-30hrs a week while attending University because I refuse to waste my life while waiting for Centrelink to declare me as independant. I don’t think it matters whether you are of a rural background or not. The only difference i can see is that parents in the city must earn alot less.
My mother is extremely disheartened when a single mother of two earns around a $1000 over the cut-off for me to recieve Youth Allowance. I think we should stop looking at what they get that we don’t, I am from the country but that doesn’t make a difference in my eyes. There is still poor and rich in both places.
The governments means testing should change….. I live over two hours from home to attend Uni that should be a signifier of independance not my damn age or wage. I earn less than 16,000 a year and I scrape by and I’m currently studying 2nd year at Uni.
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It seems that if a student wants to become independant to gain youth allowance and your parents are in business, can they not just “put you on their books” and if you are not in business than what of those students??
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very interesting discussion. I am embarking on a study for my Uni course which is looking at the effects of Youth Allowance restictive criteria and particpation rates of rural students in tertiary education. Seems to me that the burden of having to move your whole life, especailly if it is not within a few hours drive, should be enough to qualify you for youth allowance, as you don’t have the option of going around the corner to study. Also interesting with the drought, and the loss of jobs in reginal areas – what if you can’t get a job to earn the 18K? I’m very interested in people’s responses, especially those who come from rural regions, and what effect this had on their decision-making.
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Zowie, it is great to see that someone cares about this situation. It stinks, really, there are many of us out there who do not qualify for youth allowance and are struggling to finacially afford a UNI life. I am currently in year 12 looking at UNI choices, the course i want to undertake is not available nearby, the closest being 4 hours away. My mother is single and just scrapes over the parental income cut off. With three kids, travel expenses in the country and a future move for myself, theres little money to spare. This inequality needs to be addresed! There are so many similar situations to mine, and to the families which have numerous children go to UNI, i feel for you.
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