NZQA Assessment Support Material Unit standard 28093 Title Describe the future financial responsibilities of utilising tertiary study funding options Level 2 Credits 3 Version 2 Note The following guidelines are supplied to enable assessors to carry out valid and consistent assessment using this internal assessment resource. Assessors must manage authenticity for any assessment from a public source, because students may have access to the assessment schedule or student exemplar material. Use of this assessment resource without modification may mean that students work is not authentic. The assessor will need to change figures, measurements or data sources or set a different context or topic. Assessor guidelines Assessors need to be very familiar with the outcome being assessed by the unit standard. The evidence requirements and the explanatory notes contain information, definitions, and requirements that are crucial when interpreting the standard and assessing learners against it. Over the weeks prior to this assessment, learners should have had sufficient teaching and learning opportunities to be familiar with the following: Student loans and other possible funding options for tertiary education study Potential consequences of funding options on the financial responsibilities and choices for individuals in the short and long term. A W A R D O F G R A D E S For award with Achieved, learners must: describe and compare a student loan and one other tertiary study funding options in terms of their key factors (criteria for eligibility, components of tertiary study costs, advantages, disadvantages); describe and compare potential consequences of the funding options in terms of their financial responsibilities and choices (short and long term). 28093 version 2 ASM version 1 Page 1 of 12
A W A R D O F G R A D E S For award with Merit, learners must: provide a detailed comparison of the two funding options and make links to the financial responsibilities, potential consequences and implications for future choices. For award with Excellence, learners must: provide a comprehensive comparison of the funding options and a justification of the suitability of the two funding options for their financial responsibilities and choices. C O N D I T I O N S O F A S S E S S M E N T The assessment is an open book activity that will take place over a timeframe set by the assessor. Learners can use any information to help them complete the tasks. Answers must be in their own words. Assessment activity This assessment activity has one task. The learner is required to describe two tertiary study funding options for their own personal situation. One of these must be a student loan. Assessors should check that the other study funding option is realistic and appropriate to the learner s situation. The task involves: Describing and comparing a student loan and one other tertiary study funding option in terms of their key factors (criteria for eligibility, components of tertiary study costs, advantages, disadvantages) for their personal situation. Describing and comparing the potential consequences for the two options on their financial responsibilities and choices in the short and long term. Making links to the financial responsibilities and implications for future choices for the two funding options. Justifying the suitability of the two options for their own financial responsibilities and choices. Resource requirements Resources that may help with this are: Commission for Financial Capability, http://www.cffc.org.nz/; Inland Revenue Te tare Taake, http://www.ird.govt.nz/studentloans; Sorted Your independent money guide, https://www.sorted.org.nz/; Work and Income Te Hinanga Tangata, http://www.workandincome.govt.nz/; StudyLink Hoto Akoranga, http://www.studylink.govt.nz/; Breakout, http://www.fis.org.nz/databases/breakout.php; Bamzonia Personal Financial Education, http://www.bamzonia.co.nz. 28093 version 2 ASM version 1 Page 2 of 12
Assessment Schedule Unit standard 28093 Title Describe the future financial responsibilities of utilising tertiary study funding options Level 2 Credits 3 Version 2 Task Evidence/Judgements for achievement Evidence/Judgements for achievement with merit ER 1.1 Question 1 A student loan and one other tertiary study funding option are described in terms of their key factors (criteria for eligibility, components of tertiary study costs, advantages, disadvantages). A student loan and one other tertiary study funding option are described in terms of their key factors (criteria for eligibility, components of tertiary study costs, advantages, disadvantages). Evidence/Judgements for achievement with excellence A student loan and one other tertiary study funding option are described in terms of their key factors (criteria for eligibility, components of tertiary study costs, advantages, disadvantages). See sample answers for question 1 See sample answers for question 1 See sample answers for question 1 ER 1.1 Question 2 A student loan and one other tertiary study funding option are compared in terms of their key factors. The description includes a detailed comparison of the two funding options. The description includes a comprehensive comparison of the two funding options. See sample answers for question 2 See sample answers for question 2 See sample answers for question 2 28093 version 2 ASM version 1 Page 3 of 12
Task Evidence/Judgements for achievement Evidence/Judgements for achievement with merit Evidence/Judgements for achievement with excellence ER 1.2 Questions 3,4,5,6 Potential consequences of the two funding options are described and compared in terms of their financial responsibilities and choices (short and long term). Potential consequences of the two funding options are described and compared in terms of their financial responsibilities and choices (short and long term). Potential consequences of the two funding options are described and compared in terms of their financial responsibilities and choices (short and long term). See sample answers for questions 3 and 4 See sample answers for questions 3 and 4 See sample answers for questions 3 and 4 The description makes links to the financial responsibilities, potential consequences and implications for future choices for each option. The description makes links to the financial responsibilities, potential consequences and implications for future choices for each option. See sample answer for question 5 See sample answer for question 5 The description includes a justification of the suitability of the two funding options for their financial responsibilities and choices. See sample answer for question 6 Final grades will be decided using professional judgement based on a holistic examination of the evidence provided against the criteria in the unit standard. 28093 version 2 ASM version 1 Page 4 of 12
Task 1 1. Use the following table to describe a student loan and one other tertiary study funding option for your own situation/circumstances. Check with your assessor that your other option is realistic and appropriate to your situation. K e y F a c t o r s Criteria for eligibility Components of tertiary funding costs O p t i o n 1 : S t u d e n t l o a n Outline of the eligibility criteria listed on the studylink website http://www.studylink.govt.nz/financingstudy/student-loan/index.html. Description of what s in a student loan as Compulsory fees; living costs; limits. O p t i o n 2 : State here [ F a m i l y / w h a n a u ] No set criteria, but my parents have said I will need to commit to my study. My parents will loan me money to pay compulsory fees, course related costs + daily transport costs. They will also cover my accommodation costs if I am living at home. Advantages per http://www.studylink.govt.nz/financingstudy/student-loan/ There is a formal contract in case anything goes wrong. Under certain circumstances, the loan may be interest-free as perhttp://www.studylink.govt.nz/financingstudy/student-loan/student-loan-accountand-balance.html. My parents are willing to lend me the money on a as need basis so that I don t have to borrow everything at once. They have promised that their interest rate will be lower than the student loan rate. There will be less paper work and I don t have to sign up every year. Parents may offer incentives. 28093 version 2 ASM version 1 Page 5 of 12
Disadvantages There are obligations and consequences if I don t pay the loan back. http://www.studylink.govt.nz/financingstudy/student-loan/student-loan-accountand-balance.html. I need to sign a Student Loan contract with the Government for every year and each time I start a new course. Because I will be under 18 years old one of my parents must sign the contract There will be some conditions attached to the loan such as some chores at home, like babysitting my younger siblings and cooking the family dinner at least once a week. If things go wrong at home and my parents cut my funding/loan I might need to find an alternative. I will be tied to my parents for each year of the time I am borrowing from my parents. I ll have less freedom and I will have to weigh up the potential reduced borrowing and ability to work part time. (Sample answers related to awarding Achievement 28093 version 2 ASM version 1 Page 6 of 12
2. Compare the two study funding options in terms of the key factors you described above. There are criteria around the courses I can receive a student loan for, and it is a formal agreement whereas my parents might not be as restricting. I might not need to borrow as much money from my parents and it will be at a low interest rate, but there will be conditions. It will also depend on me keeping a good relationship with my parents. (Sample answers related to awarding Achievement) Borrowing from my parents make it easier to change course or study part-time without it affecting my loan. There is a student loan establishment fee of $60 which my parents wouldn t charge me. (Additional sample answers related to awarding Merit) My parents might write off interest or even loan at the end of the year if I pass everything. If I take out a student loan it will have to be paid back no matter what, and if I don t there will be consequences. (Additional sample answers related to awarding Excellence) 28093 version 2 ASM version 1 Page 7 of 12
3. Describe the potential consequences of the two (2) funding options in the short and long term on your future financial responsibilities and choices. What will you have to pay back? What will the effect be on your personal finances? Short Term Funding options Consequences Financial responsibilities Future choices Option 1: My debt will increase each I will need to keep In the short term, I will Student Loan year I am in tertiary study. track of how much I have the opportunity to I will end up with a have borrowed and undertake my study substantial student loan make sure that I without having to worry balance. comply will all student about where the loan legal funding is coming requirements and from. It will give me responsibilities. the choice about where I can study. Option 2: I may end up by borrowing I will need to keep My parents may Family/Whanau a different amount from careful track of what I forgive my debt to my family/whanau, borrow. them if I pass my depending on my financial papers each year. So needs. This may be more my future choices or less than what is about what I need to available through the pay back are reduced. student loan scheme. This will mean that my Also I may not be able to future income is not take the course I want to reduced by debt as the chosen course may repayments. not be available in my home town. (Sample answers related to awarding Achievement 28093 version 2 ASM version 1 Page 8 of 12
Long Term Funding options Consequences Financial responsibilities Future choices Option 1: I will have to pay the I will need to make If I pass all my papers, Student Loan loan and interest back sure that I make the I will still have to pay if I don t stay in New repayments on time, back the loan and Zealand. If I stay, then whether I am In NZ or these repayments will I may not have to pay overseas. reduce my spending interest. from income. Option 2: If I pass all my papers, I have the My future choices will Family/Whanau there is a possibility I responsibility to pay depend on my ability to will have my debt back my parents if I do pass my papers. forgiven and so I will not pass, and I may Passing the papers have increased feel obligated to do this means that I have financial freedom to faster than the student more spending as I do start my working life. loan repayments, as not have a loan. It this money came from also means that I can my parents retirement go overseas without savings. the loan repayment obligation hanging over me. (Sample answers related to awarding Achievement) 28093 version 2 ASM version 1 Page 9 of 12
4. How do the two options compare in terms of their potential consequences on your financial responsibilities and implications for future choices in the short and long term? Short Term In the short term, my financial responsibilities will be to repay the loan. This is the same no matter who I borrow from. The size of the loan in the two different situations would be different. If I can work while I am at home, I may be able to borrow even less from my parents than I would need compared with being away from home and needing to borrow the accommodation allowance as well. Also with my parents I would not have to pay the IRD fees. With a student loan, I need to ensure SL tax code used to ensure loan repayment transfer to IRD by employer. Repayment of a student loan reduces take-home pay and may constrain some lifestyle choices, such as saving, house purchase and higher consumer spending. May get a job in one s chosen vocation more quickly. As well, I do have some control over whether or not I pass my papers and have my student debt forgiven by my parents. Not having a loan, even in the short term, gives me greater future choices. Even if I do have a loan from my parents, I know my debt is not mounting up as much and so when I finish my studies, my future choices will be greater. I will have more spending money from my income and greater flexibility about what I will do when I finish my qualification. Long Term In the long term, my options regarding going overseas are quite different under the two funding arrangements. If I pass my papers, and borrow from my parents, I will have no financial responsibilities and my future choices will be much wider. I will be able to go overseas without any financial constraints. If I go overseas with a student loan not yet paid back, I will still have financial responsibilities to IRD. With a student loan, I will need to make arrangements for loan repayment if going overseas. With a student loan still to be repaid, that situation may determine where I go and what sort of job I may feel obliged to get. My future choices would certainly be different. Even if I do not pass all my papers, my financial obligations to IRD may well be greater than if I had borrowed from my parents. First of all, I would most likely have a smaller loan and I would not have so much interest accruing. If I borrow from my parents, I would have no legal obligations to IRD for my finances. I am sure that I could negotiate with my parents about the repayments. (Sample answers related to awarding Achievement) 28093 version 2 ASM version 1 Page 10 of 12
5. Link the financial responsibilities and consequences for the two funding options by explaining how they may have an effect on your future choices O p t i o n 1 : S t u d e n t l o a n With IRD and a student loan, there are rules and regulations, including interest requirements, attached to the student loan contract if I go overseas before I have paid the loan back. The total amount to repay is likely to be more with a student loan. O p t i o n 2 : F a m i l y / W h a n a u The link for my future choices is the degree of freedom that I will have to travel and work. If I borrow from my parents, I am sacrificing freedom in the short term for the prospect of gaining freedom in the long term. With borrowing from my parents, the interest payments would be lower and may be paid less regularly. (Sample answers related to awarding Merit) 6. Justify why each option is suitable (or not) for your financial responsibilities and future choices. O p t i o n 1 : S t u d e n t l o a n A student loan would cover my tertiary funding needs but may limit my options in the long term. I would always be in a position of having to pay the loan back no matter how well I did at my studies. This would not be the case with borrowing from my parents. I am prepared to stay at home as long as I can as having a substantial loan hanging over my head does not suit me. I can also look forward to greater freedom when I qualify. I will also be able to keep my current part time job and save more easily for going overseas. 28093 version 2 ASM version 1 Page 11 of 12
O p t i o n 2 : F a m i l y / W h a n a u I can readily justify borrowing from my parents. I will do everything I can to pass each year, and if not pass everything, I will use my current part time job income to pay them back as soon as possible during my time of study and also with my post qualification job. I intend to show my parents I am serious about getting my qualification. (Sample answers related to awarding Excellence) 28093 version 2 ASM version 1 Page 12 of 12